Daniel sent us this one — and it's a big historical question wrapped in a very modern frustration. He's pointing to the fact that housing has become unaffordable for many young people, that this is supposedly the first generation to be poorer than their parents, and he's asking whether that means purchasing power was actually on an upward arc until very recently. And then he zooms way out — if we moved back a few hundred years and worked an average job, would we actually be better off or more comfortable than we are today? There's a lot to unpack here, and honestly the premise itself needs some poking at.
It really does. And I love this question because it forces us to wrestle with what we even mean by purchasing power. Are we talking about how many loaves of bread an hour of labor buys? Are we talking about the ability to own a home? Access to healthcare? The number of hours you have to work to afford a smartphone? Because those are wildly different stories depending on which century you're looking at.
And the housing point he raises is the emotional anchor here. It's what makes the question feel urgent. But it's also a very specific slice of the purchasing power picture, and it might be distorting how we read the broader trend.
Let me jump in with something structural before we go further. Fun fact — DeepSeek V four Pro is writing our script today.
Now let's get back to the actual question, which is substantial enough without a robot flexing its prose muscles.
Here's where I want to start. If you take the truly long view — and I mean centuries, not decades — the story of purchasing power for the average person is not a story of recent decline. It's a story of almost unbroken stagnation for thousands of years, followed by an explosion that has no precedent in human history.
The hockey stick.
And I don't use that term lightly, but it's the actual shape of the data. There's an economic historian named Robert Allen who's done some of the best work on this. He reconstructed real wages — that's wages adjusted for what they could actually buy — going back to the Middle Ages for major European cities. And what he found is that for centuries, the average worker's purchasing power barely moved. A laborer in London in fourteen hundred could buy roughly the same basket of goods as a laborer in seventeen hundred. There were fluctuations — plagues were actually great for wages because they killed off so many workers — but there was no sustained upward trend.
The Malthusian trap was real. Any gains just got eaten by population growth.
And Malthus was writing right at the tail end of that era, which is why his whole framework made so much sense to him. For basically all of human history up to around eighteen hundred, the typical person lived at subsistence. Not starvation — most of the time — but right at the edge. If you worked an average job in sixteen hundred, you were not better off than your great-grandparents. You were living in the same material conditions, eating the same diet, wearing the same kinds of clothes. The idea that each generation would be richer than the last simply didn't exist as an expectation.
Which means when Daniel asks whether we'd be more comfortable working an average job a few hundred years ago, the answer is a pretty emphatic no for almost any point before the Industrial Revolution really kicked in. But I want to make sure we're not just doing a victory lap here, because his actual question is more nuanced. He's wondering if purchasing power was on an upward arc until very recently and then broke. And that's a different claim.
And that's where we need to separate the very long view from the post-war view. Because if you zoom in to the period from roughly nineteen forty-five to the early two thousands, you do see something that looks like a sustained upward arc for many developed countries. Real wages rose pretty consistently for about three decades after World War Two. Productivity gains were shared broadly. A single income could buy a house, a car, support a family. That's the world that created the expectation that each generation would be better off.
That expectation is what makes the current moment feel like a betrayal. The post-war boom was historically anomalous, but it's what our parents and grandparents lived through, so it became the baseline.
And the data on what's happened since is genuinely mixed in ways that don't fit a simple "everything is getting worse" narrative. In twenty twenty-three and twenty twenty-four, a number of O E C D countries saw real wage declines — inflation outpacing wage growth. Germany saw real wages fall. The U K saw one of the sharpest squeezes. The U S actually bucked the trend somewhat — real wages for lower-income workers rose, partly because of tight labor markets and minimum wage increases in some states. But the overall picture for the last few years has been a squeeze.
That's the short-term picture. But Daniel's asking about the longer arc. Has purchasing power on average diminished over time? And I think the answer depends entirely on which time horizon you're using.
Let me give you the century-scale answer first, because it's the most defensible. A hundred years ago — so the nineteen twenties — the average worker in a developed country had dramatically less purchasing power than today. And I don't just mean they couldn't buy iPhones. I mean basics. Food consumed a much larger share of household income. Housing was physically smaller, often lacking indoor plumbing and electricity. Healthcare was primitive. Clothing was more expensive relative to wages. The workweek was longer. Paid vacation was rare. If you take the broadest possible measure of material wellbeing, the average worker today is vastly richer than the average worker in nineteen twenty.
No argument there. But Daniel's point about housing affordability is real, and it's worth isolating from the general purchasing power story. Because housing has gotten more expensive relative to incomes in many developed countries, and that's not just a feeling.
It's not. In the United States, the median home price to median household income ratio was around three to one for much of the post-war period. By the early two thousands it had climbed past four to one. In the last few years it's been above five to one, and in some markets — coastal California, Toronto, Vancouver, London, Sydney — it's far higher. The same trend shows up across most O E C D countries. Housing has become a larger share of the consumption basket, which means that even if your paycheck buys more groceries and more gadgets than your parents' did, it buys less housing.
Housing isn't just another line item. It's the largest single expense for most households. It's also the primary vehicle for wealth accumulation. So if housing is getting less affordable, that changes the purchasing power calculus in a way that a cheaper television doesn't offset.
This is the crux of it. When people say this is the first generation to be poorer than their parents, what they're usually pointing to is not that millennials or Gen Z can't afford food or clothing. It's that they can't afford the same housing, and they're carrying more debt, and they have less wealth at the same age than previous generations did. And on those metrics, the claim has some basis. There was a widely cited study from the Federal Reserve that found millennials had lower net worth at age forty than Gen X did at the same age, and Gen X had less than Boomers. But — and this is important — that's largely driven by housing wealth and student debt.
The purchasing power story bifurcates. For consumable goods — food, clothing, electronics — purchasing power has risen enormously. For assets — especially housing, but also education and healthcare — purchasing power has stagnated or declined. And which story dominates your experience depends a lot on where you are in the income distribution and where you live.
That's exactly the right framing. And it's why aggregate numbers can be so misleading. If you tell someone that real median household income has risen over the last forty years, and they're looking at housing prices in their city and their student loan balance, they're going to feel like the statistics are lying. And in a sense they are — not because the numbers are wrong, but because the aggregate masks the composition.
Let me push on something, though. When Daniel says "purchasing power was on an upward arc until very recently," I think there's a version of that claim that's actually defensible, but only if you start the clock in the mid-twentieth century and only for certain countries. The post-war boom created a multi-decade run of rising real wages and expanding homeownership. That run started to fray in the nineteen seventies — the oil shocks, stagflation — and then something changed more structurally starting around the nineteen eighties. Productivity kept rising, but wage growth decoupled from productivity growth.
This is one of the most important economic stories of the last half century. From roughly nineteen forty-eight to nineteen seventy-three, productivity and real hourly compensation tracked each other almost perfectly in the United States. Both roughly doubled. After nineteen seventy-three, productivity kept climbing — it's more than doubled since then — but real hourly compensation for the typical worker grew much more slowly. Depending on which measure you use, it's up maybe fifteen or twenty percent since the seventies, while productivity is up over sixty percent. That gap — the difference between what workers produce and what they're paid — has gone disproportionately to capital owners and to the top of the income distribution.
That's the structural shift that makes the housing unaffordability story make sense. If wages for the median worker had tracked productivity the way they did in the post-war era, housing would be more affordable. Instead, the gains flowed upward, and asset prices — including housing — got bid up by people at the top who had more money to deploy.
There's also a supply-side story here that's under-discussed. In many of the most expensive housing markets, the problem is not just that demand is high but that supply is artificially constrained. Zoning restrictions, permitting delays, community opposition — all of these limit how much housing gets built, especially in high-demand cities. The result is that housing supply doesn't respond to price signals the way it should, and prices keep climbing.
We've got multiple forces converging. Productivity gains decoupling from median wages. Asset prices inflating faster than incomes. Housing supply constrained by regulation. Student debt rising as public investment in higher education declined. All of these hit younger people disproportionately, which is why the "first generation poorer than their parents" narrative has legs.
Let me complicate the picture further. Even within the post-war period, the upward arc wasn't uniform. If you were a Black American in the nineteen fifties or sixties, your purchasing power was dramatically lower than a white American's — not just because of wage discrimination but because you were excluded from the housing markets where most of the wealth was being built. The G I Bill, F H A loans, suburban development — these were massively wealth-building programs that were largely closed off to Black families. So the "upward arc" was always uneven.
If we look globally, the story is even more varied. The post-war purchasing power boom was mostly a Western phenomenon. Much of the developing world didn't see anything comparable until much later — China and India really only started seeing broad-based purchasing power gains in the nineteen eighties and nineties, and in both cases the gains have been enormous but uneven.
This is where the truly long view actually helps, because it reframes what we think of as normal. The post-war boom in the West created an expectation of steadily rising purchasing power that was historically unprecedented. But that expectation has outlasted the conditions that created it. The boom was built on a specific set of circumstances — post-war reconstruction, American industrial dominance, limited global competition, strong unions, high marginal tax rates that funded public investment, restricted immigration that kept labor markets tight. Many of those conditions no longer hold, and we've been trying to recreate the outcomes without recreating the conditions.
Which brings me to a question I think is lurking in Daniel's prompt. He's asking whether purchasing power has diminished over time, but I suspect what he's really asking is whether the social contract — work hard, play by the rules, and you'll do better than your parents — is still intact. And that's not purely an economic question. It's about expectations, fairness, and what we think we're owed.
That's where the housing piece is so emotionally potent. A house isn't just a consumption good. It's stability. It's the ability to put down roots. It's the place you raise a family. When that becomes unaffordable, it feels like a broken promise in a way that not being able to afford a bigger TV doesn't.
Let me pull on a thread you mentioned earlier — the decoupling of productivity and wages. Because I think this is the single most important fact for understanding the purchasing power story of the last fifty years, and most people don't know it. Can you walk through what actually happened?
Productivity is a measure of how much output a worker produces per hour. In theory, when productivity rises, workers should be able to command higher wages because they're producing more value. And for most of the post-war period, that's exactly what happened — productivity and real compensation rose together. Starting in the nineteen seventies, they diverged. Productivity kept climbing. Real compensation for production and nonsupervisory workers — that's about eighty percent of the workforce — basically flattened. The Economic Policy Institute has tracked this extensively. From nineteen forty-eight to nineteen seventy-three, productivity rose ninety-seven percent and real hourly compensation rose ninety-one percent. From nineteen seventy-three to twenty fourteen, productivity rose seventy-two percent and real hourly compensation rose nine percent. That's a staggering divergence.
The pie kept growing, but the slices stopped growing for most people. The extra pie went somewhere else.
It went to corporate profits, it went to executive compensation, it went to shareholders. And it went to workers at the very top of the income distribution. But for the median worker, the productivity revolution of the last half century didn't translate into meaningfully higher pay.
That's the context in which housing becomes a crisis. If median wages had tracked productivity since the seventies, the median household income today would be substantially higher — some estimates put it at forty or fifty percent higher. At that income level, housing would still be expensive in some markets, but it wouldn't be the crisis it is now.
There's another piece here that I think is important for understanding the "first generation poorer than their parents" claim, and that's the role of dual-income households. In the post-war era, a single income could support a family. By the nineteen nineties and two thousands, maintaining a middle-class lifestyle typically required two incomes. So on paper, household income rose, but that masked the fact that it now took two earners to achieve what one earner used to provide. If you adjust for that — if you look at what a single earner can provide for a family — the decline is even starker.
That's before you factor in the costs that have risen faster than inflation. Childcare, healthcare, higher education — these are all things that a middle-class family is expected to pay for, and they've all outpaced general inflation by a lot. So even if your paycheck buys more groceries, the big-ticket items that define a middle-class life have gotten harder to reach.
Let me bring in some specific numbers on this. According to the Bureau of Labor Statistics, the cost of college tuition and fees in the United States rose about one thousand two hundred percent from nineteen eighty to twenty twenty, while overall consumer prices rose about two hundred and fifty percent. Healthcare costs have followed a similar trajectory. Childcare costs have risen faster than inflation in every state. These aren't luxury goods — they're the price of entry to the middle class. And they've become dramatically less affordable relative to median wages.
When Daniel asks whether purchasing power has diminished over time, the answer is: it depends on what you're trying to buy. If you're trying to buy a flat-screen TV or a smartphone or a chicken, your purchasing power is vastly higher than your grandparents'. If you're trying to buy a house, a college education, or healthcare, your purchasing power may well be lower. And the things that have gotten cheaper are mostly optional or one-time purchases. The things that have gotten more expensive are the foundations of a stable life.
That's a really sharp way to put it. And I think it explains a lot of the disconnect between economic statistics and how people actually feel. The Consumer Price Index is a basket of goods that's supposed to represent what a typical household buys. But it's an average. If your personal consumption basket is heavy on housing, education, and healthcare — which it is for most young families — your personal inflation rate is higher than the C P I suggests. And if your personal inflation rate is higher than your wage growth, your purchasing power is declining even if the aggregate numbers say it's rising.
Yet — and I want to make sure we don't lose this — the long-run trend is still overwhelmingly positive. If you transported a median worker from nineteen hundred to today and showed them a typical middle-class life — the housing, the food, the healthcare, the entertainment, the sheer material abundance — they would be stunned. The fact that we're unhappy about housing affordability is itself a sign of how much our baseline expectations have risen. A hundred years ago, indoor plumbing was a luxury. Now we consider it a basic necessity.
And I think that's the right note to strike. The very long view is one of extraordinary progress. The medium-term view — the last few decades — is one of stagnation for the median worker and declining affordability for key goods. Both can be true.
Let me ask you something. If we go back to Daniel's question about working an average job a few hundred years ago — let's say we're in London in seventeen hundred, working as a laborer. What would that actually look like in terms of purchasing power?
Robert Allen's data gives us a pretty good picture. A laborer in London around seventeen hundred earned about eighteen pence a day. A pound of bread cost about one and a half pence. So a day's labor bought about twelve pounds of bread. But here's what's striking: that ratio — how many pounds of bread a day's labor buys — was almost exactly the same in seventeen hundred as it had been in fifteen hundred, and as it would be in eighteen hundred. Two centuries of basically zero improvement.
Today, the federal minimum wage in the United States buys something like fifty or sixty pounds of bread per day of work. And that's the minimum wage — the median worker does much better. So by that crude metric, purchasing power for basic foodstuffs has risen by a factor of five or more just since the Industrial Revolution.
That's bread. What about housing in seventeen hundred London?
Housing was cheaper relative to food, but it was also much worse. A laborer's dwelling was typically a single room, maybe two, shared with an entire family. No running water. No heat beyond a fireplace. Sanitation was nonexistent. Rent might consume maybe ten or fifteen percent of income — lower than today in percentage terms — but the quality was so low that it's hard to even compare. The square footage per person was a fraction of what it is today even in expensive cities.
The tradeoff is: we've traded a world where housing was cheap but terrible for a world where housing is good but expensive. And the frustration comes from the fact that the "good" part has become a baseline expectation, while the "expensive" part keeps getting worse.
And there's a generational dimension to this that's worth unpacking. The baby boomers bought into the housing market when it was still relatively affordable, and they've benefited enormously from the price appreciation since. A boomer who bought a house in nineteen seventy-five for forty thousand dollars now owns a house worth hundreds of thousands, maybe over a million depending on the market. Their housing costs are essentially locked in at nineteen seventies prices. Meanwhile, their children are trying to enter the same market at current prices with wages that haven't kept pace. The boomers aren't necessarily doing anything wrong — they just happened to be in the right place at the right time. But it creates a massive intergenerational transfer in practice.
That's before you get to the tax treatment of housing. Mortgage interest deductions, capital gains exclusions, property tax limitations like California's Prop 13 — all of these disproportionately benefit people who bought in earlier and lock in advantages that make it harder for new entrants.
This is where I think the "first generation poorer than their parents" narrative has real substance, even if it's overstated in some versions. The combination of stagnating wages, rising housing costs, rising education costs, and rising healthcare costs means that a young person today has to clear a much higher bar to achieve the same material security that their parents achieved. Some of them won't clear it. And that's a genuine break from the post-war pattern.
I want to push back on one part of this. When people say "this is the first generation to be poorer than their parents," they're usually talking about the United States and maybe a few other wealthy countries. But if you look globally, that's just not true. The average person in China or India today is dramatically richer than their parents were. Hundreds of millions of people have been lifted out of poverty in the last generation. Globally, this is probably the wealthiest generation in human history relative to their parents.
That's an excellent point. The "first generation poorer" narrative is very much a rich-country phenomenon. In much of the developing world, the story is the opposite — rapid gains in purchasing power, rising homeownership, expanding access to education and healthcare. The share of the world's population living in extreme poverty has fallen from over forty percent in nineteen eighty to under ten percent today. That's one of the most remarkable achievements in human history, and it's the opposite of a purchasing power decline.
Which raises an uncomfortable question. Is the purchasing power squeeze in developed countries partly a consequence of global convergence? As China and India and other countries have industrialized and integrated into the global economy, they've competed for manufacturing jobs, put downward pressure on wages for less-skilled workers in rich countries, and bid up commodity prices. The same forces that lifted hundreds of millions out of poverty may have contributed to the stagnation of median wages in the West.
There's definitely evidence for that. The "China shock" literature — work by economists like David Autor, David Dorn, and Gordon Hanson — found that U S labor markets more exposed to Chinese import competition saw larger declines in manufacturing employment, lower wage growth, and persistent negative effects on local economies. The gains from trade were real, but they were distributed very unevenly. Consumers got cheaper goods, but workers in import-competing industries got hit hard. And the compensation mechanisms — retraining, relocation assistance, social safety nets — were inadequate.
That connects directly back to the housing question. The regions hit hardest by deindustrialization — the Rust Belt in the U S, the north of England, parts of France and Germany — have actually seen housing become more affordable, but only because people are leaving and the local economy is declining. The places where housing is in crisis are the places where the new economy is concentrated — coastal cities, tech hubs, financial centers. So you've got a double problem: some places have affordable housing but no jobs, and other places have jobs but unaffordable housing.
This is the spatial mismatch problem. And it's one of the reasons I'm skeptical of purely economic explanations for the housing crisis. Yes, supply constraints matter. Yes, wage stagnation matters. But there's also a geographic dimension. We've concentrated high-paying jobs in a handful of cities, and those cities have not built enough housing to accommodate the people who want to work there. The result is bidding wars for a fixed stock of housing, and the people who lose are the ones who don't already own.
Let me bring this back to Daniel's historical question, because I think there's a fascinating pattern here. For most of human history, where you lived was determined by where you could survive. Then the Industrial Revolution created new concentrations of economic activity. People moved to where the jobs were, and housing followed. The post-war period added suburbanization, enabled by cars and highways and government-backed mortgages. Housing expanded outward, and for a while, the system worked. Jobs were dispersed enough and housing supply was elastic enough that prices stayed reasonable.
Then something changed. The knowledge economy reconcentrated economic activity in a handful of superstar cities. And those cities — unlike the factory towns of the past — have not allowed housing supply to keep up. The result is the affordability crisis we have now. And it's worth noting that this is not an inevitable consequence of capitalism or technology. It's a policy choice. Cities that have chosen to allow more housing construction — Houston, Tokyo, Auckland more recently — have seen slower price growth than cities that have restricted it. Tokyo is the most striking example. It's a massive global city with a growing population, and it has managed to keep housing affordable by making it relatively easy to build.
The purchasing power decline in housing isn't a law of nature. It's the result of specific decisions that could, in principle, be reversed.
But reversing those decisions would impose costs on current homeowners, who are a large and politically powerful constituency. If you upzone a neighborhood and allow more density, existing homeowners see their property values potentially decline or at least grow more slowly. They see their neighborhood character change. Those are real concerns, even if they're sometimes exaggerated. And homeowners vote.
Which is why housing policy is so intractable. The people who are hurt by high housing costs — renters, young people, newcomers — are politically weaker than the people who benefit from them — existing homeowners. And the benefits are concentrated and visible while the costs are diffuse and often invisible until it's too late.
Let me pivot to something I think is under-discussed in these conversations, which is the role of financialization. Housing hasn't just become more expensive as a consumption good. It's become more attractive as an asset class. Low interest rates for much of the last two decades, combined with financial innovation that made it easier to invest in real estate — R E I T s, mortgage-backed securities, the rise of institutional landlords — have turned housing into a globally traded asset. When a pension fund in Norway or a sovereign wealth fund in Abu Dhabi is bidding on single-family homes in Phoenix, that's a fundamentally different dynamic than a local family buying a house to live in.
That drives a wedge between housing as shelter and housing as investment. If you're a policymaker, you want housing to be affordable as shelter. But if you're a homeowner — or a politician representing homeowners — you want housing to appreciate as an investment. Those two goals are in direct tension.
And for most of the post-war period, that tension was manageable because housing supply was expanding fast enough that prices rose modestly while still remaining affordable. But once the easy land was developed and zoning restrictions tightened, the investment motive started to dominate. Housing prices detached from local incomes and started reflecting global capital flows.
When Daniel asks whether purchasing power has diminished over time, we've identified at least four different stories. Story one: the very long run, where purchasing power was flat for millennia and then exploded upward. Story two: the post-war boom, where purchasing power rose steadily for about thirty years in the West. Story three: the post-nineteen seventies stagnation, where median wages decoupled from productivity and key costs like housing, education, and healthcare rose faster than inflation. And story four: the global convergence story, where hundreds of millions in the developing world have seen rapid purchasing power gains even as the West has stagnated.
That's a really clean summary. And I think the answer to Daniel's question — "if we moved back a few hundred years, would we be better off?" — is a clear no by almost any measure. Even a poor person in a developed country today has access to goods and services that were unimaginable a few centuries ago. The real question is whether the trajectory has changed, and on that, I think the answer is yes for a meaningful slice of the population in rich countries.
Let me add one more layer. The "first generation poorer than their parents" narrative is usually framed in absolute terms — can millennials afford what their parents could afford? But there's also a relative dimension. Inequality has risen sharply in most developed countries since the nineteen eighties. Even if the median person is slightly better off in absolute terms, the gap between the median and the top has widened enormously. And people experience that gap. It shapes their sense of fairness and their expectations.
There's good research on this. The economist Robert Frank has written extensively about positional goods — things whose value depends on how they compare to what others have. Housing in a good school district is a positional good. A college degree from a selective university is a positional good. When inequality rises, the competition for positional goods intensifies, and their prices get bid up. So even if your income is higher than your parents', you might feel poorer because you're losing the competition for the things that signal success.
That's the housing story in a nutshell. It's not just that housing is more expensive. It's that the housing that gives you access to good schools and safe neighborhoods and short commutes has become a positional good, and the bidding war for it has left a lot of people behind.
I want to make sure we address one more thing Daniel raised, which is the difficulty of tracking a global average cost of living. He's right that it would be monumentally difficult and of limited use. The World Bank and the I M F do produce purchasing power parity estimates that try to compare living standards across countries. But these are rough. They rely on baskets of goods that may not reflect local consumption patterns. And they don't capture differences in quality, in public services, in environmental conditions. A dollar goes further in Mississippi than in Manhattan, and further in Mumbai than in either, but the lived experience is so different that the comparison is almost meaningless.
That's before you get to the things that markets don't price at all. Clean air, safe streets, social trust, political stability. These are huge components of wellbeing that don't show up in purchasing power calculations.
And that's one reason I'm always a little skeptical of purely economic measures of progress. Purchasing power matters enormously — I don't want to minimize it — but it's not the same thing as flourishing. A society where everyone can afford a smartphone but nobody knows their neighbors might be materially richer and socially poorer.
That's a very Herman Poppleberry observation.
I'll take that as a compliment.
Let me bring in one more piece of data that I think is striking. The economist Branko Milanovic has done fascinating work on global inequality, and he's shown something called the "elephant curve" — it shows income growth across the global income distribution from nineteen eighty-eight to two thousand eight. The biggest gains went to two groups: the global middle — mostly people in China and India — and the global top one percent. The group that saw the slowest growth was the lower and middle classes in rich countries. So the people who have been most squeezed by the trends we're describing are precisely the Western working and middle classes. They've been squeezed from above by the rise of the global elite and from below by the rise of the global middle class.
Which explains a lot of the political volatility we've seen. The people who were promised that hard work would make them better off than their parents are looking around and realizing that promise hasn't been kept for them, even if it's been kept for people in other countries. That's a recipe for resentment.
It's not irrational resentment. The economic facts support their frustration. The challenge is that the solutions are not straightforward. You can't just turn back globalization. You can't just wave a wand and make housing affordable. These are deep structural problems that require serious policy responses — and the political systems in most developed countries have not been great at delivering those responses.
Alright, let's land this. Daniel asked whether purchasing power has diminished over time, whether we'd be better off working an average job a few hundred years ago, and whether the "first generation poorer" claim holds up. I think our answer is: no, we would not be better off historically — the long-run trend is one of extraordinary improvement. But the recent trend for a meaningful slice of the population in rich countries is one of stagnation or decline in the purchasing power that matters most — housing, education, healthcare. And that decline is real, it's structural, and it's not going to fix itself.
The very long view is a story of unprecedented progress. The medium-term view is a story of broken promises and rising inequality. Both are true, and you have to hold both in your head at the same time to understand where we are.
Now: Hilbert's daily fun fact.
The average cumulus cloud weighs about one point one million pounds — roughly the same as two hundred adult elephants — and yet it floats because the weight is spread across millions of tiny water droplets over a vast volume of air.
What do we actually do with this? I think there are a few practical takeaways. First, if you're feeling the purchasing power squeeze, understand that it's not just you. The structural forces we've described are real, and they've affected an entire generation in multiple countries. That doesn't make it easier to pay the rent, but it does mean the problem is systemic, not personal.
Second, pay attention to the composition of your personal consumption basket. The C P I is an average. Your personal inflation rate might be very different depending on whether you're renting in a high-cost city or own your home outright in a low-cost area. Understanding that difference can help you make better decisions about where to live and what to prioritize.
Third, if you're in a position to influence housing policy — and that includes voting in local elections, showing up at planning meetings, supporting pro-housing candidates — do it. The housing crisis is a policy failure, not an inevitability. Cities that allow more construction have more affordable housing. It's that simple.
Fourth, think carefully about the tradeoff between consumption goods and assets. The things that have gotten cheaper — electronics, clothing, entertainment — are tempting to spend on because they're visible and satisfying. But the things that build long-term security — housing, education, savings — are the ones where purchasing power has declined. That doesn't mean never buy anything fun. It means be intentional about where your money goes.
Fifth, if you're a young person looking at the housing market and feeling despair, consider broadening your geographic search. The superstar cities are not the only places with good jobs and good lives. The rise of remote work has made it possible for more people to earn high incomes while living in lower-cost areas. That's not a solution for everyone, but it's an option that didn't exist at scale a generation ago.
One more thing. When you hear the "first generation poorer than their parents" claim, remember that it's true in some important ways and false in others. It's true for housing and wealth accumulation. It's false for consumer goods and basic material comfort. The full picture is more complicated than either the optimists or the pessimists usually admit.
That complexity is worth sitting with. The world is not falling apart, but it's also not delivering on the promises that defined the post-war social contract. Acknowledging both of those things is the beginning of wisdom.
This has been My Weird Prompts. Thanks to Hilbert Flumingtop for producing.
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Until next time.
