A Silent Recession: Why You Might Feel Bad Despite A Good Economy

If you've been feeling down despite the apparent strength of the economy, I can relate. Despite stocks, real estate, and other risk assets reaching all-time highs, there seems to be a growing silent recession among Americans.

Here are the primary reasons why I believe some of us don't feel better despite the apparent strength of the U.S. economy:

  • The cost of living is rising, seemingly outpacing our incomes.
  • Not everyone owns stocks, real estate, and other risk assets. And even if they do, their holdings may not be sufficient to offset the impact of rising prices across the board.
  • Companies are achieving greater productivity with fewer employees, resulting in layoffs and a workforce that feels overburdened.
  • Economic gains are disproportionately benefiting the wealthy, exacerbating income inequality.
  • You're in a different political party than the President

I wanted to share some personal thoughts on my own situation and also delve into the broader economic landscape. Don't forget to answer the one-question poll and share your thoughts in the comments below.

Silent Recession Due To Cost Explosion

As soon as I drained my liquidity to purchase my house, a slew of unexpected expenses arose. Here's a breakdown of the unforeseen costs incurred in the first quarter of 2024 alone:

  • $1,090 to replace a faulty vacuum pump and PVC valve in my car.
  • $220 for an oil change (compared to $150 in June 2023).
  • $1,200 for an emergency room visit for our daughter after our son accidentally dislocated her elbow.
  • $890 for two new tires due to a collision from a mom trying to park during school drop-off, despite ample space.
  • $1,430 for a new dishwasher (includes new hoses and installation) in a rental property due to a faulty door latch.
  • $2,100 for a new washer and dryer in another rental because the dryer stopped functioning and the washer lacks compatibility for stacking.
  • $300 for repairing shingles blown off the roof during a severe storm.
  • $200 for purchasing new landscaping rocks following city disruption of a landscaping project my children and I diligently worked on last summer.
  • PG&E in San Francisco hiking electricity prices by 10%
  • Home insurance rates increasing 30-40%

The accumulation of these unexpected expenses has left us feeling like we're living paycheck-to-paycheck, constantly bracing for the next unforeseen financial burden.

While our investments may be appreciating, their value remains abstract until we decide to sell. In contrast, these expenses are tangible and require immediate payment.

Families Are Feeling The Brunt Of Inflation The Most

Below is an insightful chart illustrating the price changes of various goods and services since January 2000, with the baseline overall inflation number standing at 82.4%, according to the Bureau of Labor Statistics.

However, if you have a family, you're likely feeling the pinch more acutely. This is because you may be aspiring to buy a house and save for college, both significant financial commitments. We've been aggressively saving for my son's college since he was born in 2017 and I still don't think what we've saved in a 529 plan is enough.

With more individuals under your roof, there's an increased likelihood of requiring hospital and medical services. Additionally, with more mouths to feed, your food and beverage budget naturally expands.

Each trip to the grocery store now results in a final bill that always surprises me in a bad way. Consequently, we're actively working to eliminate as many covert expenses as possible from our budget.

Inflation of various goods and services and college from 2000 to 2023

Solutions To Cost Inflation

The main solutions to cost inflation are:

  • Save up at least 3-to-6 months for an emergency fund to withstand unexpected financial surprises
  • Keep your greed and desires to a minimum
  • Have fewer kids or no kids to save money and energy
  • Invest regularly and often

Below is an insightful chart demonstrating a 52.79% decline in the purchasing power of the U.S. dollar over 30 years. Simultaneously, the S&P 500 real total return has surged by 840.5% during the same timeframe. Investing is a must if you want to overcome inflation.

S&P 500 returns versus purchasing power of consumer dollar: why it's important to invest
Source: Charlie Biello of Creative Planning

Feels Like A Silent Recession Because Not Everybody Owns A Home

The national homeownership rate stands at approximately 65%. Consequently, around 35% of Americans are not partaking in the housing bull market. In fact, starting in 2023, there has been a decline in the national homeownership rate attributed to the surge in mortgage rates.

national homeownership rate in America

Imagine if one out of every three people you see walking down the street were undead zombies—you'd never leave your house!

Not only have real estate prices largely increased since the pandemic began in 2020, but so have rents. Consequently, a significant portion of the population is not feeling optimistic about rising home prices; they may be feeling downright distraught.

Consider this: if the national median home price is approximately $420,000, a 5% increase in the median home price would necessitate a 28% increase in the median household income of $76,000 just to break even. Unfortunately, the average American household does not receive anywhere near a 28% raise every year.

In some cities, the median home price has increased by far more than 5% per year since 2020, requiring an even greater increase in wages to afford a median-priced home. Ironically, the unhappiest cities in America may very well be the ones where real estate prices have increased the most.

Some Of The Angriest People Online Are Renters

I've been writing about real estate on Financial Samurai since 2009, and let me tell you, some of the angriest commenters on my real estate posts are renters. Read the comments in posts such as:

But it's not just the opinionated posts where I recommend readers get neutral real estate that attract angry comments from renters. Even neutral posts like “Real Estate Or Stocks: Which Is A Better Investment?” can provoke heated responses.

Conversely, you see much fewer heated comments from homeowners online since 2009. They don't need to justify their decision to own because they're too busy getting on with their lives while prices inch higher.

Housing affordability is too low, which results in a silent recession or vibecession

Denial About Real Estate Performance Is Unhealthy

If you spend any time on social media or in real estate forums, you'll also notice many of the angriest voices come from renters. They dislike homeowners and any government policy that promotes homeownership, such as the $250,000 / $500,000 tax-free profit rule on a home sale. I completely understand their frustration.

There are even personal finance bloggers who could have purchased property in 2012 but chose not to, or even sold their homes at that time to advocate for investing solely in stocks. That's fine, as I also strongly believe in owning stocks for the long run. Dividend stocks become a more attractive passive income source the older and wealthier you get.

However, the way some renters criticize homeownership and anyone who invests in real estate, despite the surge in real estate prices since 2012, is absurd. So is the inability to admit that selling or not buying a home in 2012 was a suboptimal move.

Considering that everyone needs a place to live, while not everyone needs to invest in stocks, the escalating price of real estate is a significant factor contributing to the silent recession or “vibecession.”

Percentage Of Renters By City

Here's an interesting chart I found from Governing.com, which shows the percentage of renters by city. To no surprise, New York, New York has the highest renter percentage of population given New York is the most expensive city in America.

percent of renters by city
Source: Governing.com

However, what's shocking is that Chicago, Illinois (51.5% renters), Houston, Texas (53.6% renters), and Columbus, Ohio (53.4% renters), three of the most affordable cities in America, also have a greater renter population than owner population. If I were a renter in one of these cities and desired to own a home, I'd feel somewhat agitated.

To no surprise, Chicago and Houston are two of the unhappiest cities in America based on my Wealth Reality Ratio. You can learn more about my formula and reasoning by clicking on the graph below.

Columbus would also be classified as an unhappy city using my methodology since the median home price is so low ($275K), yet the net worth required to feel wealthy is so high (in the millions).

happiest and unhappiest cities in America

The Federal Reserve Is Hurting Renters Who Want To Own

If you're a renter you probably hate the Federal Reserve. Not only is the cost of everything continuing to go up after 11 rate hikes, the Federal Reserve has also made homeownership even more unaffordable due to high mortgage rates.

The only people who can afford to buy homes are those with greater financial means. After the global financial crisis, banks stopped lending to everyone except for those with the largest down payments, highest incomes, and the highest credit scores. As a result, the wealthiest people were able to buy the most number of properties for cheap making them even more wealthy.

Today, the wealthiest people are able to buy homes at discounts because they face less competition due to higher mortgage rates. If and when mortgage rates come down, there will be a return of bidding wars where less wealthy people miss out.

The Fed Governors are all rich. Chairman Jerome Powell is easily worth over $100 million. When the majority doesn't think the Fed or the federal government are on their side, no wonder why people might feel like it's closer to a recession than a bull market.

Solutions To Rising Home Prices Hurting Your Happiness

If you're a renter feeling uneasy about not owning property, one solution is to invest in real estate online. This involves purchasing a real estate ETF, a public REIT, or investing in private real estate funds.

Investing in real estate online eliminates the need for a large down payment and a mortgage. You can simply buy a single share of an ETF or REIT, or opt to dollar-cost average into a real estate fund like those offered by Fundrise.

By investing in real estate online, you can benefit if the real estate market rises, reducing the sense of being left behind. Conversely, if the market declines, your losses are likely to be less significant compared to the overall cost of purchasing a house, given the smaller scale of your investment.


Silent Recession Due To Company Layoffs

After Elon Musk acquired Twitter on April 14, 2022, he proceeded to lay off approximately 80% of its employees. Two years later, Twitter is still operational. While the site may have its share of bugs, it continues to function more or less the same.

Elon's cost-cutting measures likely influenced the hiring decisions of many leaders at other tech companies. CEOs of companies like Apple, Meta, and Google, along with others, may have thought, “If Twitter can reduce its workforce and still remain productive, perhaps we should do the same.” Consequently, many big tech companies followed suit in 2023.

Here's a chart illustrating tech layoffs by industry. It's important to compare the 2023 (blue) figures to the 2022 (orange) figures, given that we're still early in 2024.

Tech layoffs by industry

Here's another chart displaying layoffs at specific large companies across sectors in 2023 and the data for 2024 so far. Continuous reports of major companies downsizing can naturally lead to increased uncertainty about job security.

I've come across numerous reports of job seekers sending out hundreds of resumes online without much success. Even with personal referrals, individuals are finding it increasingly difficult to land positions, as companies are growing more selective in their hiring processes.

For instance, I have a friend who is 29 years old with a solid degree and expertise in data analysis. Despite his qualifications, he's been unemployed for 1.3 years. What anecdotes have you encountered regarding the labor market?

leading companies announced layoffs in 2023-2024

Artificial Intelligence: The Boogeyman

Another significant concern is artificial intelligence (AI). If you're not allocating some portion of your capital to invest in AI companies, I believe you're overlooking a crucial opportunity. AI serves as both a productivity enhancer for those who harness its capabilities and a job eliminator.

Growing pessimism among U.S. 12 the graders in high school about the world

Take Klarna, for instance, a payment processing company valued at over $6 billion. It recently reported that its AI assistant handled two-thirds of its customer service requests within its first month of launch. Consequently, many of those customer service positions are likely to disappear.

Looking ahead 20 years when my children will be entering the job market, it's conceivable that there may be a 50% reduction in available jobs due to automation and AI. This sense of pessimism about the future is bound to weigh heavily on people's minds.

Consider some of the questions students and parents may be grappling with, contributing to this silent recession.

  • Why put in the effort to excel academically when there may not be any lucrative job prospects available?
  • Why invest a fortune in college education when AI could render even computer engineering roles obsolete?
  • With the wealth gap widening despite a booming market, what's the point in striving for success if we'll never catch up?

Solution To Company Layoffs Due To Efficiency And AI

Here are several solutions to protect yourself from company layoffs and AI:

  1. Become indispensable at work. Assess your value to the company – if your absence would significantly impact its operations, you're on the right track. Otherwise, focus on taking on more valuable responsibilities and fostering stronger relationships. Going into the office if you are working remote. Remote workers are the easiest to layoff first.
  2. Diversify your active income streams by engaging in multiple side hustles. The more you can expand your side hustle income, the less vulnerable you'll be to the effects of a layoff.
  3. If you anticipate layoffs, position yourself to be among the first to be let go. Typically, early layoff recipients receive more favorable severance packages than those laid off later. Keep tabs on your company's health and research how previous laid-off employees were treated.
  4. Cultivate a strong personal or company brand. Aim to be perceived as intelligent, charismatic, team-oriented, solutions-driven, hardworking, or possessing other positive traits when people hear your name.
  5. Invest in big tech companies and private AI firms. If AI proves to be the revolutionary, job-displacing technology it's often touted as, your portfolio of AI investments may thrive. If AI disappoints, then you and your children have a better chance at securing good jobs. Check out the Innovation Fund if you want to invest in private growth companies in AI and more. There's only a $10 minimum versus a $100,000+ minimum for most venture capital firms.

A Silent Recession May Change The Course Of The Nation

You may be more inclined to be in a Silent Recession if you don't share the same political affiliate with the President

If you're a renter with children and feeling uncertain about your job prospects, chances are you're not content with the current situation. Consequently, you may find yourself venting frustrations toward the current administration or engaging in heated online discussions with strangers.

It will be intriguing to observe whether President Biden secures re-election amidst the escalating negative sentiment surrounding the economy. With the unemployment rate projected to steadily rise throughout the year leading up to November, any delay in the Fed's rate cuts followed by a potential stock market downturn could spell trouble for Biden's tenure.

We might currently be experiencing a silent recession. However, if a traditional recession were to hit again, we must prepare for the worst. After all, the best time to build our financial reserves is when times are good, not when times are bad.

Reader Questions

Do you believe we're experiencing a silent recession? How do you feel about the bullish stock market and the increasing cost of living? As a renter, how are you coping with rising home prices?

For those employed, are you growing concerned about job security? And for the unemployed, how long have you been without a job, and what's the current job market like?

How are you feeling about the economy and your financial situation?

View Results

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As for gauging any uptick in discontent within the comments section of Financial Samurai, I'll provide updates in upcoming newsletters. With over 2,500 posts published since 2009, I have amassed a substantial catalog of content that can reflect the prevailing mood of the nation.

40 thoughts on “A Silent Recession: Why You Might Feel Bad Despite A Good Economy”

  1. Jennette Willoughby

    I agree with this article on the whole. But I cannot help but think that if all of the smart, well educated people who are the likely readers of this article follow the advice to have fewer and fewer children, that it will lead to a gradual dumbing down of the population. I cannot see how that will lead to anything good in the long run.

    1. Financial Samurai

      That’s the beauty of procreation. It doesn’t discriminate against rich or poor. Most people can procreate. And given children are priceless, it would make sense that the less financially wealthy you are, the more you will procreate.

      1. Jennette Willoughby

        Smart, well educated people can be either rich or poor. I still don’t see how it makes sense in the long run for that group of people to be advised to essentially remove themselves from the gene pool.

  2. Is this time in history that much different than any other time in history? Doesn’t our world always change? Don’t prices pretty much always rise over time? Didn’t we have a period of low inflation? Don’t we have to be ready for periods of accelerated change? One commenter said, “my typical Starbucks order was 40% more”. Doesn’t that say it all? We buy wayyyyy too much crap then complain about it. For the record, I am just as guilty as anyone but I do try and remind myself that I don’t have to go to Starbucks or drive a $50k vehicle. I don’t have to have a $600k house in a high tax area, I could have a $300k house with low taxes and insurance. Almost all of our financial issues are self inflicted, that is obvious. There is a whole lot of opportunity out there to make a great living! You have to billing willing to work though!

    1. Matthew Drybred

      I smile when someone complains about how much more expensive their groceries have become, yet they still put it in their cart thereby reinforcing that the price is fair.

      The reality is that consumers….consume, and much of that consumption has very little, if any, return outside of the moment in which it’s consumed.

      I look at consumption as being like washing cotton candy.

      1. >I smile when someone complains about how much more expensive their groceries have become, yet they still put it in their cart thereby reinforcing that the price is fair.

        what would the alternative be?

        1. Matthew Drybred

          Cheetos cost $11.22lb? Buy store brand.

          Philadelphia Cream Cheese is $7.38lb? Buy store brand.

          Oreos are $6.40lb? Buy store brand.

          Buy frozen vegetables instead of fresh that you might risk letting rot.

          Buy less. Eat less. Waste less.

          Say to yourself, “I’m not buying that.”

  3. Your chart indicates since 2000 wage increases have fairly significantly outpaced inflation. That doesn’t seem to support your overall thesis and the general mantra you hear on CNBC, twitter, etc.

    I know just since 2020 we have given major salary adjustments to our employees when inflation spiked and always gave adjustments well in excess of that year’s CPI.

    I think rich versus less rich is a combination of individual financial decisions, luck, and what class you were born in. I think it has very little to do with government policy. Bottom line is regardless of interest rates or gov spending, if you put 10% of your salary/compensation in a 401k and invest in SPY you will never feel “poor” after the age of 40 or so. It isn’t that hard. But it takes discipline, planning, and the right attitude.

    1. Financial Samurai

      Not too significant actually. The thing is, a lot of folks, myself included, feel like inflation is understated in many areas. Then there are the people who get small raises in the 1-2% range or no raises or have no day job income like me.

      1. Well it is true that the recurring costs like food and energy tend to go up and to the right. That is why it is so important to educate everyone to get into the market at an early age – even just a bit, which goes up and to the right at a more upward trajectory. Yes real estate and other stuff are good investments too, but that is less tangible, less liquid and more work. Understanding one chart is pretty easy.

  4. Our democracy is skewed due to the ongoing polarization of wealth. The pursuit of happiness has become waiting for Godot, and the American dream is turning into a nightmare.

  5. Sam,

    I disagree with your assessment on AI, both in terms of the impact to the job market and as a potential investment. Let’s start with the job market. Back in 1997, during my first job out of college, my cubicle mate volunteered to help part time as a webmaster. This was a fancy word to basically describe the building out and management of a website. At the time, the typical webmaster had to create HTML code, copy that code to a server, and manage a small database that was needed to operate a company’s website. I was enamored with new technology and learned what I could because the word on the street was that this new internet / web technology was going to put a bunch of jobs in jeopardy. Twenty years later, for a ridiculous amounts of money, I ran several engineering teams to build and manage a web portal to deliver medical test results to patients that numbered in the tens of thousands. One team was responsible for writing the front-end code, another team was responsible for managing the servers, another team managed the database, and there was a quality assurance team. Other teams that I did not manage like product management and business analysts were also involved. In essence, millions of dollars per year in salaries were being used to run a website which was easily handled by 1 person in 1997. The new internet technology that was going to increase productivity and slash costs was doing the exact opposite! More jobs and money were being spent on a web portal that wasn’t even core to the company’s business. The same will happen with AI. There will be a lot of “fake” productivity where useless presentations, code, and low value content are produced which will then increase the need to hire a lot more people to manage said content. Instead of dozens of people involved in creating a web portal as it is today, companies will hire whole AI divisions of prompt engineers, data scientists and managers to create websites that provide only marginally more value than they did in 1997. Of course, there will be real value too with AI just as there was with the internet, but any value derived from AI will be dwarfed by massive overspending on AI and its management.

    This brings me to my second point, which is that AI is a risky investment that will have bubble phase that will pop, like the dot com bubble of 2000. The reason is that AI requires massive hardware and data science investment that doesn’t yield any results for at least 9-12 months in the best of cases. Because of the long lead time, high costs are incurred without any feedback as to the value of AI projects. To speed things up, management will throw more resources at AI projects, which doesn’t help as there are intrinsic bottlenecks that require long lead times. Even worse, many of these AI projects will fail, but the typical corporate behavior will be to double down (i.e. sunk cost fallacy). Moreover, because everyone else is doing AI other companies will jump right in, regardless of whether there is business value or not. Due to this corporate behavior, AI technology companies will see massive increases in new customers and their product’s usage, which will cause valuations to spike. At some point, the music will stop, and the AI market will crash. The companies that survive the crash will become the next Google or Amazon, but picking those winners will be impossible. To complete the dot com analogy, NVDA is the CSCO of 1999. While there is some real value in AI, it’s not as much as the market thinks there is, and the time needed to realize this value will take 10-20 years to play out. The market is not that patient, hence the bubble and crash, making AI a risky investment.

    1. You have summarized, very clearly, my thoughts on AI and the parallels with the internet boom. It will be interesting to see how this all pans out, but from an investment perspective, my thoughts are to see which firms survive the inevitable bust and seems to be providing the most tangible value that I can actually understand.

  6. Canadian Reader

    We recently drove down to Seattle for the day to try and take our kids to Science World- we didn’t end up going inside. Anyway, I’m always interested to see how pricing is on the other side of the border. The places we attended were all more costly than their Canadian counterparts- after adjusting exchange. Our typical Starbucks order was like 40% more! I’m not sure what to think but its pretty expensive for Americans, at least in the PNW where we were.
    It was also really sad to see the general health of the people. I don’t mean to be offensive or hurt anyone by making this observation, but it was really glaring and hard to ignore. I fully appreciate that we were not in major centres, so there are some hard to reach aspects to consider, but still.
    People are complaining here, but I don’t think things are any better in the US.

  7. I think there has always been a silent recession for people on the wrong side of what the rich call progress. The number of those people has been growing and continues to grow at an ever faster pace, especially with accelerating advances in AI/automation.

    U.S. Census Bureau data shows the income gap between the lowest 20% of incomes and the highest 5% of incomes has roughly doubled in the last 50 years – the rich are getting richer and the poor are getting poorer. The last decade of money-printing programs helped banks and large corporations jack up profits and executive bonuses while reducing the buying power of the dollars still left in many American wallets (a.k.a. inflation). The recent spike in interest rates injected into an inflationary environment means debt (like mortgages) gets more expensive at the same time goods and services are more expensive. The people on the wrong side of progress feel trapped.

    In 2015, NPR did a study of the most common jobs in all 50 states from 1978 to 2014. Even accounting for error or bias, the theme was consistent: low-skilled labor/service jobs, primarily trucking/delivery, assistant/administrative services, and food service are by far the most common jobs in the U.S.. Most of those jobs don’t have the kind of wage & benefit levels that can keep up with the kind of inflation we’ve had.

    As the number of people feeling their silent recession continues to grow, they’ll continue feeling screwed by big money and big government who seem to be winking at each other and ganging up on them. Politics has been and will continue to get uglier and more polarized, partly as an extension of resentment from the people in the poor side of “progress” toward the people on the rich side of progress (despair, unfair, un-American)…and vice versa as higher income folks increasingly feel looted by (wealthy and corrupt) politicians seeking lower income votes by running on Robin Hood platforms while they goose their ultra rich buddies behind closed doors.

    There are solutions that have been bandied about for years, but no painless ones, and pain doesn’t get votes. I think the silent recession will get worse – and loud – before it gets better.

    1. RE: “I think there has always been a silent recession for people on the wrong side of what the rich call progress”

      Agreed! This is because the type of twisted concept of “progress” the rich have normalized in the “advanced” world is utterly anti-nature and anti-life and exploitative of other people, which is the direct result of the richest folks who rule anywhere being most obvious psychopaths in front of everyone’s “awake” nose — read the free essay “The 2 Married Pink Elephants In The Historical Room” … https://www.rolf-hefti.com/covid-19-coronavirus.html

      “[The World Health Organization/WHO] recommends “health for all.” But, if we look really closely, we realize that health for all, according to WHO, means medicalization and vaccinations for all. That is to say, “sickness for all”.” — Ghislaine Lanctôt, MD, in 2002

  8. Good post. It crystallizes a number of factors that are nibbling away at our buying power. Fed policy is not helping either. Many people I know are less optimistic about the future now.

  9. Things are tough now, long term with globalization on the decline, things will be better. Those chips factories and nuclear plants being build have to be manned by someone, NOT AI. Going a physical engineering route vs software is the way to go.

  10. Colorado Craig

    This reminds me of the old saying “if your neighbor losses their job it’s a recession if you lose your job it’s a depression.” I’m doubtful the fed is going to slow inflation with interest rate adjustments. The fed government needs to stop pumping money into the economy. Started with COVID and has not stopped. It will take some time (potentially years) for the money currently in to work it’s way through. Generally there are always winners and losers in every economy be it market sectors, geographically or personally. It appears the middle class across the entire country is feeling the full brunt of inflation. This is not limited to a geographic area and is a very large portion of the population. These are busy people trying to provide the best for their family, better their lives and future generations. Chasing the American dream. Generally don’t complain. With real wages not keeping up with inflation life is getting more difficult the feeling of going backwards. It wouldn’t surprise me if the fed does a good will half a basis point lowering gesture in the third quarter without impact to inflation. It just feels like the federal government has to stop pumping money into the economy to slow this freight train down. It’s going to take some time. High inflation in the end will probably be what slows the economy. This rate of inflation especially on food is not sustainable. However I fear the landing will probably not be soft.

  11. Hi Sam
    Agree with the post. I think those who have children might consider focusing on building generational wealth and have something to pass down. I’m a boomer and grew up in a military family that preached “Do it on your own”. That’s all good and life has worked out very well for my wife and me, but I want to give my two twenty-something boys a leg up in life and pass on as much as I can. The struggle is real.

  12. Very well done, Sam. I am completely secure in my finances and yet, the amount of misery I see out there, even in our own country, disturbs me. As do concerns about the future of the national debt, global warming, and so many government leaders that are not leaders at all.

    I determined sometime back, around 2010, that occupational displacement (AI) was inevitable and that if humankind couldn’t handle making more and better stuff, and doing so more efficiently and less expensively, creating enormously greater quantities of wealth in the process, then that was on us and our institutions, not on the technologies.

    Economist Stuart W. Elliott prepared a paper titled “Projecting the Impact of Computers on Work in 2030” where he detailed what he called “Occupational Displacement” and suggesting that 30 to 60% of the jobs, excuse me, occupations, that existed then could be gone by 2030. He also detailed some steps that might make this trauma go a bit easier on us. It depended largely on a drastic re-engineering of the the educational process (probably the kind that every yearbook printer, class ring jeweler, teacher’s union, textbook printer, school photographer, football dad, and cheerleader mom would would rise up in arms to prevent).

    That paper was published on the National Research Council’s web site in 2007. I read it when it came out, and I realized then that I would either have to own AI, or be owned by it, and began investing accordingly.

    Not a thing has been done by any of our so-called leaders to act on it. The kids that would be graduating from college and looking for non-existent work in 2030 were not yet born at the time the paper was published. Now they are in high school; yet it’s not a problem any politician of either party will want to touch before it is impossible to ignore any longer (and probably not even then).

  13. While I agree about investing in AI, it is difficult to pick a winner. Instead of trying to predict which small startup will be a home run – perhaps invest in large companies that will likely buy up these winners? (Microsoft, Meta, Apple, Google)?

    1. Yes, I think it’s a good idea to have some exposure to the large tech companies as well as invest in a fund that invests in a variety of private AI companies, like the Innovation Fund.

      The other derivative way to benefit from the AI boom is to invest in single-family homes in cities that have the most AI companies. This means San Francisco, San Jose, New York, and Seattle. I plan to do all three and see what happens 10-20 years from now.

  14. You forgot the real reason some people won’t accept we’re in a booming economy: politics.

    Facts don’t matter to some.

    1. Good point. If you’re not in the same party as whomever is in power, then you’re not feeling as great. Let me pull up a great chart that shows this and add it to the post at the end.

  15. Great blog as always, Sam. I feel blessed to have fortunate timing in acquiring my primary residence in 2009 and then my first investment property in 2020 despite the eviction moratorium in CA… and then being able to re-fi at very low rates in 2020 as well. Things are getting more expensive all around… I just bought some toothpaste from CVS for $6 and noticed the tube is smaller!
    There are uncertain times for sure and I feel for those with families struggling to stay employed, feed their families and trying to buy their first house. I feel it’s only going to be more difficult in the future. Appreciate the article and insights!

  16. Adulting is expensive these days! I read recently that housing is 33% of the average American’s annual expenses, transportation off the top of my head was around 14% and food was over 12%.

    Thanks for such a thorough post! I found myself repeatedly thinking wow the quality and detail of your articles is truly incomparable to everything else out there.

  17. Jonathan Y.

    Excellent graph on how prices of different items have increased over the last 20+ years. What is often forgotten during the recent surge in inflation is the cost of home and auto insurance.

    (Raise your hand if you’re afraid to even open that envelope for an insurance bill.)

    My theory on why inflation has been so sticky last couple of years is largely because of those home/auto insurance expenses.

    1. I suspect your poll will be skewed towards a higher % of readers of Financial Samurai feeling more optimistic than the general population

    2. Tracey Powers

      Brother Sam, I’m not sure if you’ve noticed, but every single American took a Huge paycut when Biden got into office. Gas prices tripled, food prices skyrocketed, everything we buy costs more & most people’s wages did not increase. How is this a good economy, Dear Sam?

      This time the numbers really are lying, because day to day Americans are being crushed under our own government. There are so many more homeless among us & our government is paying for phones, lodging, food, & medical care for the 8 to 10 million people who have already crossed our border illegally. Only God is able to save our beloved country now. Our national debt is completely unsustainable, unless our country repents of the slaughter of our children, rampant human trafficking, immorality on a scale never before seen in the U.S. until now and a host of other things we all are guilty of. God help us!

      Thank you for your hard work, Sam, and for inviting all comment. God bless you and your sweet family.


      1. Spot on post Tracy. Amazing how people deny facts right in front of them. Don’t forget the WEF that Biden attends where Klaus Shaub states that us small people will “Own nothing and like it by 2030.” Their goal is to get rid of the middle class, and only the rich are getting richer. Crime skyrocketing and California budget deficit, the only way this country can be destroyed is on purpose. Biden has to ask his handlers if he can even take questions. Giving out money to illegals that is unsustainable while kicking our veterans to the curb. All the COVID lies coming out now. Liberals attempting to normalize pedophilia. Barack Obama promised to “fundamentally transform America” and he never said for the better. We are now on our way to a Marxist country thanks to him! What’s not to like as only the rich will get richer in this MArxist society!

        1. Why is the stock market at record highs if we are Marxist? You do realize that in a Marxist society the workers control the means of production and stock values are meaningless right? You do realize there is shortage of skilled labor in the construction trades right? I have a neighbor who is an immigrant from Latin America and he has more business and more projects than he can handle because the local people in my city do not have the skills to build and repair homes and businesses, but he does. Please do not label an entire group of people as pedophiles. You should know better than that. We can debate and have discussions but do not demonize liberals.

          This nation has to be liberal at times and conservative at other times and there has to be debate and a give and take. That is how a Democratic Republic works. Both sides have to accept and tolerate when the other side wins and we cannot go down the road of us vs. them. This country is the greatest engine of economic progress and wealth in the entire world for all classes of people. Poor people in America have more opportunities than poor people anywhere else in the world and immigrants are risking their lives that those opportunities everyday.

          Obama made record investments in the VA and if you knew about those investments you would understand how transformative his efforts were. I have service members in my family and they have the best health care in the world. The VA facilities in my city are among the best in the nation and highly respected. The VA provides care that all Americans deserve and the system works very well. Do mistakes happen to veterans? Of course, doctors and the Medical systems can’t save everyone but they are getting better.

          Obama did transform the country with the Affordable Care Act and now even Republican states are signing up for Medicaid expansion and healthcare.gov subsidies in record numbers and that is a good thing. I want every American to pay for their medical bills and I don’t want hospitals providing free care to people anymore. Everyone who goes to the doctor should be able to pay their medical bills. That is transformative and we are on the way to getting to a place where every American has health care, not just health insurance and that will transform the way Americans live.

          We need to keep moving this country forward and Marxism is not part of that future and calling Biden a Marxist is not helpful. President Biden is doing a great job, could things be better? Yep always, but to demonize liberals is not going to be helpful to you in any way.

          1. Will are you smoking crack? Biden is doing a good job? Hahahahahaha my God you people should see what’s actually going on with our defense institutions on the ground….

            1. I have family members that work in the defense industry and they have never done better in their entire lives. The defense industry is making money hand over fist and so are all the workers. The military members need massive pay raises, but that is not an issue Biden can fix on his own. This country pays contractors more than enlisted soldiers and it has been that way for a long time and if you think Trump is going to do any better for enlisted soldiers you haven’t been paying attention.

              Trump called soldiers who died in foreign wars suckers and losers, is that okay with you?

          2. Hi Will,
            Glad to hear you are in a minority which do well in Biden’s economy that is not driven by the private sector and ingenuity of the American people but unconstrained growth of the government. This year we will collect about $4.8 trillion in federal revenue yet Biden wants to spend 7.3 trillion creating a massive deficit and calls it “deficit reduction.” That’s where growth you are talking about is coming from. Biden yelling and raving like a lunatic during the State of the Union address does nothing to address the deficit and the highest debt/GDP ratio in history.

            Biden is doing a good job? Let’s talk about it a little bit. Catastrophic withdrawal from Afghanistan, Putin invading Ukraine, where we dump hundreds of billions to fight proxy war with Russia with no end in sight. Biden’s weakness emboldened Iran while their proxies attack Israel and disrupt international trade in Red Sea. We have the highest inflation in almost 45 years and prices continue persistently higher albeit at a somewhat slower rate. I travel a lot across the country and know well what the price of gas was in January 2021 and today – 100% increase. Try to live on fixed income as we do and you will stop spitting drivel how great the economy is.

            Job growth? That’s another colossal lie coming from Biden. Mostly part time and low paying service jobs barely surpassing pre-covid levels from February 2020. By definition those who work for pay ONE HOUR A WEEK are counted as employed. Since February 2020, the number of jobs increased by 2.3 million to be exact while US adult population increased at the same time by 8.1 million, which means people are dropping from labor force like dead flies and the labor participation rate sinks to the new lows according to the BLS.

            Let’s add rising crime. Violent crime is rising in many places exponentially while powerless and demoralized cops are quitting in droves. This year Birmingham, AL, surpassed St. Louis, New Orleans, and Baltimore as the most dangerous city in the US. This illusion of lower crime Biden lies constantly about comes from the fact that some of the biggest jurisdictions in the country (NYC, LA, NO among others) have stopped reporting it to the FBI so their tax base won’t leave those cities in droves. America’s prosperity has been built on immigration but there is a big difference between legal immigration and invasion by hordes of illegals, many of whom are hardened criminals and traffickers. The rest are overwhelming our social services, schools, and hospitals. Have you recently been to ER? No? Good, because I did and almost bled there to death with internal hemorrhage waiting hours for my turn. What do you think the point of saturation with phony asylum seekers is? 20 million, 100 million, a billion maybe?

            The SCOTUS prohibited Biden from forgiving student loans yet he defies the law and does it anyway. This and thrashing our immigration laws erodes our legal system. When that collapses there will be no country.

            I could go on and on. In closing, I just want you to know that unlike you I know very well what Marxism is. I experienced it for over a half of my adult life. I escaped from it and will do whatever it takes to defend our freedoms. Came to America, worked at minimum wage $3.35/hr, and made from bottom 1% to the very top. I believe in hard work, education, and persistence and not in socialist fantasies.

            Sorry to tell you, but you are so corroded with Marxist ideas you don’t realize you are a mouthpiece of his socialist utopia. Violent overthrow of capitalism in the Communist Manifesto and the dictatorship of the working class have been replaced by PC terms such as social justice, equity, progress, diversity, inclusion, white privilege, and oppression. In the name of pseudo science and gibberish of climate change promoted by Marxists and totalitarian NWO we are on fast track to losing our freedoms and becoming a society envisioned by Lenin and Stalin. Came to this country LEGALLY and I don’t need lectures from your ilk about droves of illegals and tons of fentanyl smuggled to this country by human traffickers benefit this country and other liberal nonsense.

            1. Temporary increases in government spending brought on by Covid are not Marxist ideas my friend. Your entire post is devoid of facts or anything to prove your argument. The United States has been in massive debt since 1789 and the government has always and I mean always leveraged its balance sheet to promote social welfare and economic growth.

              If we have a problem with spending too much why aren’t interest rates higher? Why? Republicans always say the debt is going to cause a problem when it reaches certain levels, but then the debt reaches those levels and nothing happens, why is that? The United States always sells all the debt they issue at normalized rates. Always! The United States government has never missed a debt payment in its history and never will.

              The United States is the greatest economic engine in the history of the world and it doesn’t matter the source of the spending government or private sector it all counts toward the GDP which is at record highs and growing very well right now. Stock markets are forward looking indicators and the markets are forecasting economic growth for years to come and they are right.

              If you lived under Marxism you know that things are better here even under a Democratic president and if you know about Marxism you would know that Trump represents a faction of the country that wants to destroy our liberties and freedoms. Trump is no Ronald Reagan and Trump is not a conservative in any sense of the word, but I don’t need to tell you that.

              You know nothing about my politics my friend and I do not consider myself a liberal in any sense of the word. I am an independent as the Founders of this nation intended and I will support what is best for this nation and it certainly isn’t Donald Trump and the MAGA movement. It is unAmerican to support hate and fascism in this country and Americans should not be doing that.

              Good luck to you! Your comments on the ER are weird. I have gone to the ER a couple of times recently and the care I have received is world class and the doctors had me back to normal in no time. The healthcare system where I live is great and I have excellent insurance and receive all of the benefits that I need when I need them.

      2. Tracey,

        Your post is very negative and very wrong, no one ever makes money betting against the US economy and the future of the US. The future is very bright and if you are not making money in this economy there is something wrong going on. Gas prices have not tripled in this country. Covid artificially lowered prices because we had a national lockdown and everything temporary became artificially cheap. Oil prices went negative during Covid for a few days. They were paying people to take oil deliveries. Unbelievable right? But it really happened in April of 2020.

        Gas prices in 2019 averaged $2.60 a gallon and in 2024 the price of a gallon is $3.40, but much lower in most of the country. In my city gas is $2.90 per gallon. In 2007 gas prices were over $4.00 per gallon, then dropped to $1.60 per gallon in 2009.

        Here is more good news. This country needs more workers to lower the prices you are complaining about. More workers puts downward pressure on wages and lowers inflation. Immigrants do that Tracey. The more immigrants that enter this country the cheaper our goods and services will become. In my area schools are closing because there aren’t enough children, but the solution is not closing the border. The solution is inviting new children that are waiting with backpacks on into our country. We need them and they need us. Immigrants from all over the world built this nation into the economic power it is today.

        I can trace my ancestry to Europe and my ancestors immigrated here in the 1800s and were spoken about the same way you are speaking now. My family has done incredibly well in this country and now we pay more in taxes and have more than my ancestors could have ever dreamed and my story is not unique.

        The strength of this country is our openness and the economy is indeed the best in the world and getting stronger and if we close our borders to others it will destroy all of us and the future will belong to some other nation that can and will take our place.

        Tracey do not bet against Biden or America or you will lose every time. Whether we have Republican or Democratic presidents the country always marches forward. The only thing that can destroy the future is us. If we vote for discrimination and hate it will destroy the future for everyone. Keep that in mind when you vote.

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