The Philip DeFranco Show - What’s Really Happening in Trump’s Economy

Episode Date: March 20, 2026

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In the summer of 2016, the Brits were debating whether or not to leave the European Union. And someone said something that really resonated. It was at a public event in Newcastle just before the referendum where a panelist warned that voting yes would hurt Britain's GDP. And after they said that, someone in the audience yelled back, that's your bloody GDP mate, not mine. And I thought a lot about that comment recently. Not so much because I'm a big Brexit guy, but because, you know, I think it captures something, it feels very true about my own country, right, the United States. More and more, it seems like there are two Americas, two economies, two apparently incompatible realities. First, there's the America that's prospering, even despite Trump's tariffs and everything else that happened since Trump took power.

Where well, GDP shrank 0.6% in the first quarter last year, it grew 3.8% in the second quarter, then 4.4% in the second quarter, then 4.4% in the third quarter and 0% Which was less than expected, but overall the economy expanded by about 2.1% last year, even as some predicted a recession. And in fact, it wasn't just growth. Even unemployment kept surprisingly steady at around 4.4%. And that's like a historically normalish number. That's Christopher Clark, an economist at Washington State University. We're near peak employment. Now, what I mean by that is if you look at prime age workers, people between the age of 25 and 55, so we're not worried about students, we're not worried about retirement.

But between 25 and 55, the employment to population ratio is in the range of historic highs. Right, and inflation, it's remained pretty low since 20203, even despite the tariffs hovering around 2.5%. Insumer spending also looks surprisingly strong. And, I mean, if you look at the stock market, I mean, I don't need to tell you. The Dow is over 50,000 right now. The S&P at almost 7,000. And the NASDAQ smashing records. And putting aside that that was her response to a Jeffrey Epstein thing,

it looks like the economy is booming, right? Everyone should be thriving. It's all good, right? Well, the thing is, if you ask ordinary people, their answer is it's very clear. No. One survey found that 87% of Americans think that there is a cost of living crisis. With half, struggling to pay their bills on time each month

or afford necessities like groceries. At the end of last year, six and ten Americans said that the economy was not working well for them. Over a third said that their finances got worse over the year compared to just a fifth who said they got better. The share of Americans who predicted that their finances would improve this year, it dropped 15 points from nearly half to exactly a third. And as one op-ed in the he'll put it, aspiration has been replaced by survival, though the future feels less like a horizon and more like a choke point. In fact, the consumer sentiment survey is right now, it's almost lower than it was during the great financial crisis. And there is not a single measure that says our economy is anywhere close to as bad as it was in 2009.

In terms of this disconnect between perceptions and data, no, this is the first time we've seen this. Now, to be clear, you know, perceptions and economic data, they diverge before. For example, it's long been documented that when a Democrat enters the White House, Republicans say that the economy is doing poorly, and as soon as a Republican takes power,

Democrats go sour. But this time, while, yes, the partisan effect is still observable, it's notably muted, so pretty much everyone agrees that things kind of suck. Even the team that's rooting for the person who's in charge, So whether it's Republicans right now or Democrats a few years ago, they are not as enthused as say they were in comparable economic conditions in decades past.

You know, with this, I wanted to understand what the hell is actually going on. And so I did some digging and what I found is very strange. And so I want you to get in the car with me, we're going to go for a ride. We're going to learn some history, sort out fact from fiction, hear from some of y'all, and get to the bottom of why your life feels like it sucks so much. Starting with the fact that's kind of surprising, but also kind of not. It turns out that many of the ways that we typically measure the economy were never actually meant to measure your well-being at all. We should start with the big one, right? The one that both political parties have smacked each other with for decades, GDP.

Because believe it or not, the concept of calculating national income which preceded GDP, it goes all the way back to 17th century England, but GDP, as we know it today, it really starts in the 1930s. Also, quick aside that the term GDP, it didn't replace GNP until the 90s, but they're basically the same thing, so just for clarity's sake, I'm gonna use GDP going forward. But that's said, the big inciting event was the very exciting event was Great Depression, which made a lot of people realize, oh shit, we need a better idea of what's going on in the economy. Because while we often take for granted the overabundance of data that we enjoyed today, back then, there just wasn't much being collected. Right, and what data they did have, it was years old and pretty much useless for explaining whatever the hell just shook the capitalist world to its core.

With the U.S. Commerce Department's then head researcher telling a senator, I'm impressed constantly with a request for information that we get in the Department of Commerce, so many of which have to be answered to the effect that we do not know. So often, we have to say we do not know and nobody else know so far as we can tell. But early that decade, Congress tasked the government with compiling statistics, and they proved helpful in planning how to roll out and justify the new deal. Meanwhile, over in Britain, they didn't hop on board the GDP train until the Nazis invaded Europe, and then the government finally realized that you need stats to plan war production. Or because until then, even the people overseeing aircraft production, for example, had no idea how many propellers

were being made and they were just kind of flying blind. So the government, they start pulling out quarterly bulletins, detailing their stock levels as well as things like the state of the working population and locations of production bottlenecks. Another thing is, at first, the idea of economic growth that didn't have the all-deciding importance that it does today. In fact, there was no single number that was meant to represent the health of the entire economy. Instead, there was a complex system of accounting that governments used to design policy. But over time, GDP, national income, and economic growth, they started to be used as metrics for progress. You had people throwing them around in debates, FDR citing them during his election campaigns,

companies relying on them to get a picture of the economic environment. And after the war, GDP was given an extra boost by its association with the allied victory, since the United States had massively outproduced Germany and Japan. Then, with the Great Depression still in the war, still in recent memory, policymakers feared that the transition back to a peacetime economy it would cause a sharp contraction in chronic unemployment. So boosting GDP was top of mind, not just for the sake of economic stability, but also for social cohesion, political success, and military superiority.

Also, speaking of which, during the Cold War, GDP became a metric for comparison between the US and the Soviet Union as well as between the world's developing economies. Meanwhile, you also have the US using GDP in the rollout of the Marshall Plan that rebuilt Western Europe to calculate how much aid each country needed. And the White House set of its Council of Economic Advisers, which, as historian Philip Lippinis put it, became a vehement advocate of what was later to be termed growthmanship, the idea that increasing gross national product must be accorded absolute political priority. With him also adding, growth was the decisive factor in politics, more important than distribution

of wealth or other social parameters. It would solve America's material and social problems. Consequently, politics was the politics of productivity. And the rest, it's history, right? People gradually forgot GDP's origins as a policy tool to deal with the extreme circumstances of the Great Depression and the Second World War. And so eventually it just became taken for granted as an end in itself, rather than a means to an end, and other social goals receded into the background.

But from its very start, and especially over the past 20 years or so, critics have pointed out its numerous shortcomings as a metric of general well-being. So for example, there's a long list of things that increase GDP, but that we definitely don't want more of. Think car crashes, natural disasters, hospital bills, legal fees, financial speculation, you kind of get the point here. As long as money's exchanging hands, it doesn't matter where, when, how, why, or between whom it's happening, GDP goes up. In fact, more recently, a huge amount of growth that we've seen has been concentrated in just a few places, one of which is AI. Nearly half of GDP growth last quarter went toward purchases of information

processing equipment, and most ordinary people, they don't feel that, at least not directly. The average consumer, I don't know, has seen the exact benefit from the amount of money that's been spent on the app buildout, and maybe that's to come, who knows. So that's Kyla Scanlan. We've had her on the podcast before she's an economics writer, best known for pointing the term by obsession to describe the data perception gap that we're talking And late last year, she actually traveled around the country to see how folks were doing, observing what she called invisible prosperity, visible decay. So there's all of this prosperity that's like really hidden within technology, but if you go around certain cities, you know, you see this very visible decay in terms of infrastructure. Like Los Angeles as a city hasn't fixed any potholes for the past few months because of some regulatory problems.

And there are other less quantifiable, more qualitative stuff that's really gotten much worse over the past year, namely uncertainty. And I mean that, yes, the conventional sense that businesses don't know how to plan for a future right now because they don't know what the economic landscape's going to look like next week, never mind next month or next year. Yes, also in a broader sense that most people can feel uncertainty about your job getting replaced by AI, uncertainty about your neighborhood getting rated by ice, and certainty about your democracy even existing a year or three years from now. And so when someone tells you that the economy, it's just doing great and there proves the

latest growth numbers, what they're really saying is that the total value of goods and services being purchased, it's going up. That's it. That's all it means, which isn't to say that it's Meaningless growth does matter and it gives some indication as to how the economy is doing however plot it is So as Clark points out thanks to Trump's tariffs growth was about half a percent lower than previously expected and Inflation's about a half percent to one percent higher than it otherwise would have been which isn't just numbers. That's bad In fact he says that the reason that things aren't worse isn't that economist's predictions wrong it's that Trump backed off of his insane tariff rates that he initially imposed on liberation day or to say it in other words he tacoed again The average tariff rate on China today is 15 percent had we kept 150 percent

50% tariffs on China permanently, we most likely would have seen a recession. But with that said, you know, we've got to dig a little deeper into GDP as well as a few other popular metrics because that big, broad average, it conceals a ton of important details that help explain why people feel so shitty right now. So let's start here with a very simple, very obvious yet often forgotten point. Nobody experiences the economy in the same way. A less than 1% are homeless. That's as awful as you can imagine it to be. 12% below the poverty line. That's that's really, really, really difficult. Above the 30 percentile, now people can afford to pay their bills. Once you get to the median, so the 50th percentile, they're actually doing really, really well.

Now, if you're in the top 30 percent, my gosh, you're living on the moon, you know? It's an extraordinary time. So there's a huge diversity of economic experiences, and it's not as simple as saying that other people do better than others. Instead, it's more accurate to say that some people's lives are getting better and others are actually getting worse. This is an idea you might have heard of called the K-shaped economy. Basically, you can imagine this graph where the y-axis measures how people are doing, and you've got two groups that branch off from the middle. One trending upward and the other trending downward, so it forms the letter K. What that's meant to show is that while the broad averages might suggest that everybody is doing okay,

the truth is that a large chunk, they're just not. And, you know, there's a number of ways to kind of slice and dice this, but let's start with the way that people participate in the economic growth most directly, the stock market. Because while it's true that most people own at least some stock, it's also true that the vast, vast majority is held by the wealthiest slice of society. And so the top 10% of Americans, they own over 87% of corporate equities and mutual fund shares. In fact, they own around two-thirds of all household wealth in the country, while the other 90% of people, they divide up the remaining third, the biggest wealth gap since at least World War II. And richer people, they spend more money. So nearly 60% of consumer spending recently, it's come from the top 20% of Americans, which is a record high. And it's something that economists have been concerned about because it means that the economy is basically being held up by a smaller and smaller share of the population. So that means that if rich people stop spending, then the economy just stops moving and we're all screwed.

But even in the meantime, a ton of people closer to the bottom, they're already pretty screwed, and that's just their normal existence. So when someone says, hey, buddy, GDP's up, stock markets up, consumer spending's up, the question you have to ask is up for who? So if we really wanted to measure a healthy society, you'd probably look at the cost of health care, you'd look at the cost of child care, you'd look at the cost of elder care, look at the cost of housing, and you could get a pretty good sense of how expensive it is for people to, you know, get a house, build a family. retire their parents, get the help that they need for their own health. And yeah, you guessed it, all of the things that she listed have gotten more expensive. But also, before we dive into those, I want to take a closer look first at one of the other metrics that seems kind of pretty good right now, unemployment. Right, I mentioned earlier that it's only 4.4%, but that reflects two things.

One, people aren't getting fired, and two, people aren't getting hired either. This is why you often hear people describing the job market as frozen, there's not a lot of activity going on. So if you already have a job, you're sitting pretty comfortable, at least for now, right? Some folks are still worried that AI is going to replace them any minute. But if you don't have a job, then you're in a tough spot, right? I can feel like you're just locked out of the system. Especially if you've just gotten out of college, right, you don't have much of any experience under your belt yet. And you're just kind of thrust into this job market that wants nothing to do with you.

If you're a young person, the unemployment rate starting to rise. If you're under the age of 25, it is wickedly difficult to get a job. In fact, that hiring rate for like under 25s right now, we haven't seen that since like 2012. And the economy in 2012 was still sluggish and recovering from a huge. huge recession. And while it's true that a lot of people have jobs, it doesn't tell you anything about what kind of jobs those are, whether they're part-time or full-time, pay well or very little, gives benefits, have reasonable hours and on and on and on. Never mind whether it's the job that someone actually likes, you know, the one they imagine that they'd have when they left school.

When you graduate college with a degree, it's more and more unlikely that you get a job in whatever your degree was. In fact, as a 2024, 42% of recent college graduates were classified as under-employed, the highest level since 2020. With that meaning that they're employed in a position that typically doesn't require a degree. I'll get you back to the show in just a minute, but first, let me thank a sponsor and ask, you know, do you realize that your kid can get profiled by the internet before they can even spell unsubscribe, which is deeply horrifying and somehow still considered normal? Well, that's why today's sponsor, Proton Mail, is offering a smart alternative with their new campaign, born private.

And this one actually hit me because email is basically your digital name tag for life. School logins, apps, accounts, and random newsletters that you regret at 2 a.m. And it all starts with an email. But also, most of us didn't choose our first email, like some wise digital life decision. A lot of us panic picked a username back in 2007, and now you live with the consequences. Right, and Proton Mail uses end-to-end and zero-axis encryption, which means that your emails are for you, not for advertisers, trackers, or even Proton itself. No ads, no tracking, no profiling, which in 2026 feels weirdly luxurious.

And here's the big thing. Proton now lets parents reserve a child's email address early. You can lock in their name today with a symbolic $1 donation to the Proton Foundation and keep it protected for up to 15 years until they're ready to actually use it themselves. So instead of your kid inheriting the same creepy ad-fueled internet nonsense that we did, they get a cleaner start. Head to Proton. Dotme slash DeFranco to protect your digital identity now. Reserve your child's email address before the internet does. But again, even if it's the job you wanted, it still might not be the job you wanted.

Right, and for this, I'll let Erin explain. And like you, Aaron's a beautiful bastard, right? She watches the Philip DeFranco show. I actually reached out to the community to kind of try and see what people were experiencing. And Aaron, well, she's from Chattanooga, Tennessee, and, you know, she's doing what she wanted. But also, it didn't pan out exactly the way that she wanted. When we were interviewing for grad schools and stuff, they were saying like, oh, yeah, when you're done with school, you're going to make plenty of money and you'll be able to pay off these student loans, no problem. No. Occupational therapists make around, if you look at the whole U.S., 100K a year. I'm right around 76,000.

I've been working for four years and it's been slowly creeping up. And it's like, when is that 100K going to happen? Now in paper, her income's still above average, and when you add in her husband, you know, they're doing pretty well making $130,000 before taxes, closer to $110 after taxes. But then, when you look at the other side of the ledger, things are a little less pretty. But she's got around $400,000 in student loans that she hasn't even begun to pay off yet because they've focused on her husband's $80,000 debt first. So she started paying off hers right now. It would cost some $400 bucks a month, but until then, it's just growing. Meanwhile, she's also racked up credit card debts and she's lost her part-time job during grad school when the pandemic hit.

And so it all adds up. Every month, there's several hundred dollars. for her husband's student loans, another 500 for his car payment, around $600 to her parents for their help securing her house and moving costs, and then $1,900 for the mortgage itself. And for mind things like groceries, gas, all the rest of it, plus surprise expenses like medical bills. Right, in December, husband's autoimmune disorder flared up, and so he went to a chiropractor to manage the pain,

but that wasn't covered by his insurance, so they had to pay thousands of dollars out of pocket. But the main point here is that even if you've got six-figure household income, you can still feel like you're barely keeping your head above water. And then when you look at where job growth is and isn't happening, you realize the market is totally a lopside. 97% of the jobs added to the economy last year were in healthcare and social assistance.

Without those jobs, the United States would have nearly 400,000 fewer jobs than I did a year ago. You know all blue collar and manufacturing jobs, they've been getting wiped out as Bucky experience firsthand. I worked at a, like, drink production facility. They made kombucha.

They laid off the majority of the staff. It was like on, like, President's Day last year. I get there at 7 a.m., and the first thing they do is the founder of this, you know, companies, like, starts his, speech, like, I started this in my basement kind of thing, and I'm like, oh, God. Now, there's a number of reasons why healthcare is doing better than other industries.

Historically speaking, it's relatively insulated from ups and downs in the market. You know, we have an aging population that requires more care, and older people tend to have more money to spend on elected procedures. And so we're seeing the same case shape in healthcare as we are in the economy as a whole. Thanks to rising home values and stock prices, those at the top enjoy long-term care, full body scans, plastic surgery, and expensive dental treatment. But if you're at the bottom, I'm not sure how I was to put this, Shit's fucked. Right, not only if Republican politicians cut Medicaid and Affordable Care Act subsidies, kicking many people off their insurance and spiking premiums for everyone else.

But even before all that, healthcare had been getting more expensive for decades. In 1960, healthcare ate up just 5% of GDP. Today, it is 18%. In 1970, the average person paid about $700 in today's money for out-a-pocket healthcare costs. Today, that number's over $1,500. Since 1999, insurance premiums have risen three times as fast as workers' earnings. And there are many, many reasons for that, one of which, ironically, is the way our enormous GDP, interacts with the specific nature of health care. It's very labor-intensive. If you want someone to care for you,

you have to pay them to care for you. And the US is a prospering economy in the globe. So to pay someone to take care of you in a very labor-intensive fashion means you have to pay American wages, which are very high. It's one reason why education is expensive, because education is also very labor-intensive. So as a result, more than a third of US adults

say that over the past year, they've skipped or postponed getting healthcare that they needed because of the cost. And that's something that we also heard for more than one of you. So I honestly need to go to the doctor a lot more. It's just I put that off because it's one of those things that in my head, it's something I can worry about later. Grants, I should be taken care of it now, but it's one of those things with bills.

I'm like, I'll worry about that later. I mean, there's a couple other non, you know, threatening or non-immediate medical things that like to take care of, but I just because I don't know how much is going to cost, because the policy is not clear and because the coverage seems to be changing to be less ideal for the workers, then I don't want to go initiate these procedures and initiate these visits and then end up being left with a big bill that I can't pay. For that second guy, Peter, he told us how he was once referred to a specialist that was supposed to be in network, so he was expecting a $20, $30,000 copay, but a simple office visit

ended up costing $150 to $200. And with the first guy you heard, James, he described routinely having to choose between a copay at the doctor, his phone bill, his trash bill, car insurance, gas, or some other necessity. Savings don't exist. We're paycheck to paycheck. And he's not alone. Last year, nearly a quarter of all U.S. households

lived paycheck to paycheck according to Bank of America. When you're living that kind of existence, you're one surprise away from what I like to call being seriously fucked. We heard from people who got there thanks to unexpected medical bills, vet payments, car repairs, you name it. One woman even resorted to a predatory lender and had to put up her car as collateral.

The car that she needs to drive 45 minutes to work, without which she has no idea what she'd do. When you've got children like James does, forget about it. One time surprise, I had my kid, he stepped on the air conditioner unit. That was a good, like, 150 for all the parts and everything. My son's kids left to run, play outside. I mean, in the new house here, they got into our shed where we have the water for the well, and he hit a pipe, so the pipe burst.

That was like another almost like 300 of a fix. James, he's lucky enough to have a stay-at-home wife who takes care of the kids, but child care, it's also gotten more and more expensive. Or with it rising 8% in less than two years, double the rate of overall inflation over the same period. And so with that, last year, seven and 10 Americans said that raising a child, it's unaffordable, up from 58% a year earlier. Right now, everyone's like, oh, just go for it. And I'm like, with what money?

You know, who can blame them? It's understandable not to want more mouths to feed when prices of the supermarket have gone up and up since the pandemic, and they just keep on going. Even if I get like a bag or two of groceries is like at least like 100 to 150, even like items like 12 packs of soda used to be 799, and now they're 1099. I know like roasts now are like $40 for a single roast. Plus utility bills have also gone up with natural gas prices, rising more than twice as much as wages over the past year,

and electricity outpacing inflation, especially due to the AI boom. We have very, very bad energy management in Indiana. Something like 60% of our electricity costs are because of like data centers in the state. And so our utility bills have creeped up steadily. over the past year. It's true, when you look at the big, broad numbers, these rising prices, they don't seem like, you know, they're that big of a deal

because they're paired with rising pay. Right on average, wage growth has kept pace with inflation, but the key word is average. In reality, just like no one experiences the economy the same way, nobody experiences inflation the same way either. So inflation, it tends to be higher for lower income folks, because the larger share of their budget goes towards the most inflated goods

like housing, utilities, and groceries. And with lower income people, they tend to see less wage growth as well. So it's actually not guaranteed that their paychecks are keeping pace with rising prices. Going back to that K-shaped economy idea, while you have people at the top, maybe having more breathing room, many at the bottom are feeling the squeeze, like with Chris. In our industries, the raises are not happening. And yet at the same time, the prices have gone

up. You know, we can't get out of Costco without spending, you know, $300 to $500 depending on what we're getting. And utilities go up all the time. And yet we still have debt that we're trying to pay down. Now, you'll often see media reports describing inflation as cooling. And yeah, that's true. It's back down to normal levels from the 2022 peak. But that just means that prices aren't going up as fast as they were before. Even if inflation drops to zero tomorrow, there's still a whole bunch of accumulated inflation

from the past several years that's just kind of baked in now. It's called rise like a rocket and fall like a feather. So prices are gonna rise real quickly. They're gonna rise like a rocket. But when it's time for prices to go down because there's been some decision

about tariff policy or there's been some supply chain realignment, prices don't go down that quickly. Plus, even the apparently low 2 or 3% inflation numbers that we're left with, they're kind of misleading. Because they make it seem like, oh, you're just spending a few percent more on all the same stuff, right? But what that hides is all the stuff that you stop buying because you're devoting more of your budget to the stuff that you do buy. And when you and a bunch of other people stop buying certain things or you buy less of them, the demand for those fall and so does their price. And so at the end of the day, some things get more expensive, other things get less expensive. And when you look at the overall average number, it seems like inflation's pretty muted.

But in reality, you're buying less stuff and you're paying more for the stuff that you do. buy and the combined effect of those two things, it is a serious loss to your real purchasing power. So when it comes to Trump's tariffs, for example, Clark gave us their negative impact on your average household. The National Tax Foundation puts out an estimate around $1,500 in 2025. But when the cost of basic necessities goes up, you can't just stop paying for them, right? They're necessities. So people then borrow money to make ends meet, and they've been doing that a lot recently with total household debt now reaching nearly $19 trillion.

And so credit card debt, nearly 1.3 trillion mortgage balances, over 13,000. trillion auto loan balances, 1.67 trillion. And almost 5% of all that debt is in some stage of delinquency. Which is actually a pretty normal number, historically speaking, but you don't have to be delinquent to feel the squeeze of monthly debt payments. Right, just take auto loans. Prices for both new and used cars soared after the pandemic. Car insurance rates have more recently spiked and repair bills, they've climbed 63% since 2020. Or, you know, take mortgages. According to the National Association of Realtors, the average principal and interest payment, it has doubled since 2020. And then it's not just buying a home. Renting's more expensive, too, going up 36% since 2020, according to Zillow.

So between 2009 and, I don't know, mid-2010s, housing was quite affordable. And then it was starting to rise again. And the big shock came like in 2022 to today. And there were a number of reasons for that. There was a lumber shortage. The cost of construction labor rose dramatically. And remote work drove people into the suburbs or even the middle of the country so they could have space in a home office.

And so you had 38% of respondents in a recent survey saying, they've moved because where they were living became too expensive. But that percentage rising to just over half of Gen Z as opposed to under a fifth for baby boomers. Right today, your average young married couple needs 70% of their household income to afford the average down payment. Just before the pandemic, it was still a lot, but they only needed 58% and in 2000 it was just 45%. And so, you know, this ain't your parents economy anymore. We'll get back to the video in just a minute, but first, let me thank a sponsor and say, you know, I've got to thank you for trusting us to wade through the chaos of the daily news cycle.

You know, doing this special episode on the economy, it's rewarding work because this affects everyday people, especially with energy prices skyrocketing. And that's why we've used today's sponsor Ground News as part of our research process in today's deep-dye. Right behind the scenes of the PDS, we use Ground News to account for media bias, relative levels of source factuality, and of course know who owns the source because, well, you know, that can matter. And you know, if you want to dive deeper into the impact of rising oil prices, ground news aggregated 300 articles, podcasts, and analyses from across the political spectrum, all centered around Iran's attacks on Gulf energy sites and the resulting oil supply disruption.

They even link directly to key moments and podcasts where this topic ends up being discussed, saving us hours of manual research so we can focus on expert interviews and primary research. And easily my favorite's the blind spot feed, which flagged stories covered mostly or entirely by one side, helping you quickly spot gaps in coverage. You might be surprised with how much people are missing. So hey, go see for yourself why they've got over 10,000 five-star reviews at ground.com. Just scan that QR code or head to ground. News slash DeFranco today to get 40% off unlimited access to the Vanguard plan, which is the one I use. And remember, for most people, their rent or mortgage, it eats up the biggest chunk of their budget by far.

It's like one-third of your budget, and that's like a healthy budget. For some people, especially if you're in like the 20th percentile, income percentile, it's like half of your budget. But you're not just buying a house or apartment, you're also buying a neighborhood and all the things that come with that. Maybe you have to commute really far to work. Maybe there's no public transit nearby. Maybe there's pollution or crime or too much noise. Maybe the local hospital's underfunded.

Or maybe the school your kids go to, it's falling apart. Or maybe there's no good supermarket within reach. Or maybe, depending on where you live, you've got to worry about the the heightened risk of a climate disaster destroying everything you own. That's what happened with our guy James we spoke to, who had a nice deal renting out his father-in-law's house in Florida before Hurricane Helene filled it with four to five feet of water. So we pretty much had to start from scratch after that. We like got rid of everything. We had couches, beds, uh, toys, like everything, appliances. And we put a down payment on a mobile home that his family's been living in for

about a year now, but it's been financially devastating. Rufema helped a little, but it cost him $3,000 in fees just to start building it and another $10,000 for the home itself. And then when you add up all the furniture and the appliances, he says that the total ended up somewhere around $30,000 to $35,000. And then the mortgage is about $1,000 a month, plus property taxes and impact fees or another $1,000 or so per year. I had to pull out loans out of my 401k. And it had a hardship loan. I had to use like pretty much any money I got back to put the down payment on. So it got us pretty behind. You know, while most people haven't lost their homes and Hurricanes, James, he's not alone in dipping into his retirement early. Last year, a record 6% of

workers in 401K plans administered by Vanguard took a hardship withdrawal. That's up from the pre-pandemic average of about 2%. And the top reasons you had being cited were the need to avoid foreclosure and eviction or pay medical expenses. This is a pattern that I've noticed in the data as well as with lots of y'all who reached out where people just can't afford to think about or plan for the long term because they are so focused on trying to survive in the short term. We see that with retirement. We also see that with homeownership. So the median age where a first-time homebuyers now 40 years old, up from 33 years old, just five years ago, and 28 years old back in 1991. There's a lot of data that does point to these life milestones getting delayed,

which I think creates some, you know, worry for people about if they're getting what they want out of their life. People are pushing marriage later and later. They're pushing kids later and later. They're having fewer kids. They're buying a house later and later. So I think people feel like it's not fair that they haven't been able to achieve that quoted American dream. And that's something that we've heard over and over again for people who reached out to us. Y'all were told a certain story about how life is supposed to be,

but when you finally grew up, the story, it turned out to be a fairy tale. I feel like I'm failing myself and my girlfriend and my family. It's like, I was told growing up that if you, you know, go to high school, go to college, get a good job, and you work hard, I was told that would mean, you know, that would lead yourself to success.

And that's just not been the case. You know who has been living the American dream? The fucking boomers. So that's not fair, not all of them, but on average. And on average, they did pretty damn well in a lot of ways compared to their kids and grandkids. So the boomer owners have, you know, an extraordinary amount of wealth. They own, like, I think it's 38% of the housing stock, despite being 22% of the population.

They just got born at the exactly perfect time to benefit from the rise of globalization, the rise of suburbs, the rise of white-collar work in the United States as we started outsource manufacturing. Now, that's great for boomers, but, you know, younger people are looking up at all the wealth that their parents and grandparents have. and going, okay, great, maybe pinch off a little for us. My grandma left me like a trust fund. I don't know how much money it is in it because I'm not allowed to have access to it. It's maybe enough that I could maybe own a house. But I don't know about that anymore because so many houses are so expensive.

So we have an $84 trillion dollar wealth transfer happening, the greatest wealth transfer in history. But most boomer parents haven't really talked to their kids about what an inheritance would look like. They've also got more political influence, not just, because of their money, but also because they vote more, so government policies often designed with them in mind. Meaning that they get cool stuff like tax breaks so they don't have to chip in as much. Meanwhile, we're all spending the most on them

in the form of Medicare and Social Security. But also, you know, I'm not trying to be like, hey, fuck old people. I'm sure your parents, they're fine, they're lovely. I don't actually know if that's true. They could be awful, but what I'm trying to say is that when it comes to the K-shaped economy, a lot of the inequality that puts some people

on the top half of the K and others on the bottom half, it's not just economic, it's generational. Whether it's the stock market, the housing market, the job market, inflation or consumer spending, older folks, they tend to be in a better financial position. But with that said, you know, I don't want to make it sound like they're better off in every single way. Where they had no shortage of their own problems when they were our age and we're benefiting from our own historical developments as well. So inequality has gone up, but this is a measure of relative inequality. In other words, how, what is the gap between me and the top person? But if you look at absolute standard of living, that is improved at every level of the economy.

Gen Z has a higher purchasing power than any generation has had before. for them on average. Every decade, the purchasing power of the new generation or the median person is higher than it was before. They're living at a higher standard of living. They're able to afford bigger houses, safer cars, better insulated houses and higher miles per gallon, higher quality health care. The middle class can afford cancer treatments that were totally impossible 30 years ago. Now that's not to say inequality doesn't matter. It certainly does. For an economic inequality You can cause a lot of problems in housing markets, especially when new homes aren't getting built. It can also lead to some people having disproportionate influence in our politics.

And it creates some thorny issues when it comes to social cohesion and people's feelings about their own social steps. Because human beings, they're not just isolated individuals. We are social animals and we care about how we're doing relative to others. And so when we see teachers and nurses burned out, working harder than most people get barely scraping behind. Meanwhile, the Epstein class is living it up just because they own stuff, that doesn't feel super fair. That's when we start getting a little French revolutionary. And this is also where the first where the first thing, the subjective and the objective, the vibes and the reality, it becomes a little hard to distinguish.

Because while inequality it has reached historic levels, people's perceptions of it are often driven more by the algorithm than the underlying economic reality. I definitely think social media has exacerbated all of these problems because people do see this portrait lifestyle on platforms like Instagram where, you know, these models and these creators are getting paid to go to like Tulum and do a photo shoot and to have a very glamorous lifestyle. And Clark argues that's true of perceptions of the economy in general, not just inequality. My primary hypothesis at this point is the rise of the internet, and especially the rise of social media, has made our attention scarce. Scarcer than it ever has been.

So people who write the news, people who tell you about what the economy is, have to compete for our attention harder than ever before. And unfortunately, with human psychology, what gains our attention is sensationalism and more than that, negativity. And my evidence for this is not just the fact that when we measure the negativity bias and headlines, it's been getting more and more negative. But if you do these surveys and you ask people, hey, how's your personal situation? Their personal financial situation, they'll say, 72% of them will say it's okay. But when you start asking, hey, how's your local economy doing? Is it good or bad?

Only 40% say it's good. Hey, how's the national economy? Only 20% say it's good. Well, no one can experience the national economy. The only way we know what the national economy is doing is by looking at our information diet. So yeah, it's true. A ton of people are really struggling, but it's also true that lots of people who aren't struggling say the economy is bad, not because, you know, anything they've experienced, but because the media that they consume tells them it is. Or in other words, some of y'all are on TikTok convincing each other that we're in a silent depression when it's like, sure, things are bad, but they're not 1930s bad, at least yet. And y'all, this sucks because I don't want to be the annoying old guy who's like, fucking my day.

Because when I first started down this rabbit hole, I was hoping to kind of reemerge with a nice simple conclusion like, hey, the numbers lie, your feelings are correct. Or even, actually, you're all delusional. The economy is doing pretty good. But the truth is it's complicated. The economy has improved in a number of ways, whether from generation to generation or just the past several years, and things also don't seem to be quite as terrible as people think they are when you survey them. Yet, it's then also true that the economy is not doing as good as many of the traditional metrics suggest. And there are in fact a bunch of ways that it has gotten so much worse, both from generation to generation, and over the past several years. So the problem isn't that the data is lying

or that people are wrong. Both are kind of right in their own ways. The problem is that we've been measuring the wrong things for 70 years and nobody told us. We can't settle debates or properly move forward by citing abstract statistics like GDP or unemployment or stock market values, however useful they may be.

We need to get specific about what we actually want from our economy and be real about making sure that everyone gets it. The days is simply assuming that the benefits of growth will automatically trickle down to everybody, those are over. Because really, if there's anything that I've learned from this deep dive,

is that you don't have to be starving or destitute to feel like the system's screwing you. And those feelings, they're not just feelings, right? Some of it stems from social media, dumerism, sure. But a lot of it's the fact that our basic metrics miss a bunch of the stuff that the economy is actually failing to deliver over and above basic necessities. We're very privileged in a way that we're able to talk about the economy in terms of self-actualization. Most people, not all, most people in the United States can afford bare necessities. So our primary conversations about the economy and the U.S. has been, well, why do people feel this way?

And what do they really want out of a life? And thinking of an economy in that way is relatively new, I would say. What I heard from y'all covered the spectrum of hardships, from exhaustion and burnout to delay the life plans to a lack of any basic sense of security. Especially right now, and especially being trans, I don't feel very optimistic about the future. I more or less just want to be able to work so I can just relax when I'm not working. It's hard to plan for bigger future things. Like we would like to get married in the near future and we'd like to do some more traveling while we're younger and able to do it.

But getting the money ready for that and set aside is just hard and you keep having costs pop up here and there. Whenever someone says, what do you see yourself in five years? Hopefully not homeless. So if we keep assuming that the things are good enough just because the GDP's okay or the stock markets up or unemployment's pretty low or inflation's cooling, then we'd don't just miss how bad things really are. We also miss how much worse they could get. Because right now, this economy seems to be perched atop with the economist Diane Swank calls

one-legged stools. But those referring to just a few things propping up the broad numbers, namely health care, artificial intelligence, and wealthy consumer spending. You kick out any of those three pillars, and she argues that the whole thing could topple. And so the question going forward isn't, is the economy good or bad? It's good or bad for whom. But you know, with all that said, I do want to give a big thank you to our experts, Clark, and Scanlan, are our beautiful bastards, Bucky, James, Aaron, Peter, Chris, and Caitlin as well. well as everyone else who just sent us emails telling us about your unique situations. Even with how big this video is, we couldn't fit everyone in, but that the team and I, we read them

all, we deeply appreciate your input. And of course, a place where you can share your own, have conversations with people on this, is in those comments down below. But with all that said, my name's Philip DeFranco. You've just been filled in, and I'll see you next time, whether it be the regular news show or the next super mega big deep dive.