Highlighting 3 major problems in the American economy today
Hello, welcome to another episode of, will I be able to afford all of my groceries this month in America. Just kidding. But seriously, how is the U.S. economy really doing during President Trump’s second term?
If we really think about it, I would say many of the issues that are plaguing the U.S. economy today have predated Trump, although I wouldn’t say he has ameliorated all of these issues either.
To look at the most basic list, here are the main issues that are really paralyzing the U.S. economy:
Lack of worker mobility. It is incredibly expensive to move to a different city in the U.S. right now, and it is also risky given how quickly people have gotten laid off in the past year or so. Many people who are locked into apartments, or homes with a low mortgage rate have no interest in making a leap to a new city, even if they did have access to a more booming job market. The most obvious example of this is New York City. However, this is exactly what a stagnant economy needs. A more dynamic structure. This can’t happen if people are staying put.
Higher costs coupled with lower consumer spending. I was looking at a social media post on Threads that went completely viral. It was the monthly budget of a 26 year old girl living in Los Angeles, and it was quite ridiculous. $342 a month on groceries, another $200 on monthly subscriptions, $500 car payment, $2500 for rent, and the list went on. The sad part is that many people who commented on this viral post also admitted they were scraping by. When monthly living costs eat up your entire income, which is incredibly common for the majority of Americans, people stop going out as much and spending on services grinds to a halt. In such a market, corporations can get very stressed out, mass layoffs happen, or hiring slows (which is the current trend based on the BLS report from August).
Capital flight. This is something that I have been thinking of extensively ever since I went to Bali. There are many millennials who have an American passport (which, despite Trump being President) still remains one of the most prized passports in the world. There are so many countries around the world where your U.S. passport will get you in for free—you don’t need a visa. This, coupled with the possibilities of remote work realized during the pandemic, has led to an increase in remote workers shedding their expensive lifestyles in the U.S. while they still earn in dollars abroad.
The problem with capital flight, is obviously that the money is not being spent in America. Instead of you going out to lunch at Chic Fil-A and supporting an American business, you’re getting a lunch that might cost you $2 USD in Bali. I would say this is not a major problem right now in terms of lost revenues in the United States. But, if the economic situation deteriorates further in the U.S. and pushes more people into the existential void of wanting to leave the country, it can create serious problems for local businesses. This is part and parcel of what is called globalization 2.0, in which the information economy has evolved to the point where workers are detached from their country of origin, they don’t pay taxes, and sort of exist in off the grid places while they manage their portfolio.
When looking at these list of issues, it becomes highly apparent that we are living in a completely different world than our parents, the baby boomers, only held together by the illusion of chain restaurants like Outback Steakhouse that we pass when we are driving, producing a certain nostalgia for an American period of growth and prosperity that has been replaced with remote workers ordering UberEats from their apartments.
These deep, structural problems cannot be solved by arguing and yelling at each other through the void of the Internet either. Ultimately, there is too much friction and not enough dynamism in the American economy right now. I would also go so far as to say that the culture wars are leading to a generation that is perpetually distracted, in which productivity could also slump. The only major upside right now is that the majority of the wealth in America is being held, right now, by baby boomers who are aging in their homes, blissfully dismissing it all while they walk their dogs around a sleepy suburb at night, with the faint reminder that one day they will need to transfer their life savings to their children so they can too have a shot at a decent life. To the likes of millennials, some of which are struggling to afford a home of their choosing, it would be beneficial if that transfer happened sooner rather than later.