I think there are multiple interesting factors at play here: most importantly downward pressure on prices (brought by technology) and the unequal distribution of wealth/income.
Technology has made a lot of stuff far cheaper than it used to be. Instead of buying a photo camera, a video recorder a tape recorder, etc. you can buy a smartphone for the price of one of these individual items (at 1980/90 inflation adjusted prices).
A lot of services we consume have become a lot cheaper as well. Compare Netflix & Spotify for a few $ months to buying individual movies & CDs. A lot of people spend their free time on Youtube/Facebook/Reddit essentially spending nothing at all.
A lot of younger people living in cities are no longer purchasing cars or homes. Overall travel has become a lot cheaper as well. IKEA has commoditized furniture which used to be extremely expensive a few decades ago.
Cheaper prices mean lower spending & lower GDP.
At the same time a smaller group of large companies is capturing the profits in the low cost sectors (again IKEA, Netflix, Google, Facebook). These companies are making huge profits per employee and they are facing very little successful competition.
A majority of the middle class (that doesn't work for any of these highly profitable companies) has very limited free cash flow, due to the rising cost of housing and education and the stagnation of wages. They can't afford to purchase expensive homes, expensive furniture or expensive cars.
More wealth is going to the highest earners, where each additional $ contributes a lot less to GDP than it would in the hands of a middle class household.
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I'm throwing a lot of stuff together here, but this is what I'm missing from most discussions about the economy: try to describe trends with the concrete situation at hand rather than with generic theories that have been around for decades yet have mostly failed to predict the economic outlook correctly (it seems like the rise of behavioral economics could help here)
Technology has made a lot of stuff far cheaper than it used to be. Instead of buying a photo camera, a video recorder a tape recorder, etc. you can buy a smartphone for the price of one of these individual items (at 1980/90 inflation adjusted prices).
A lot of services we consume have become a lot cheaper as well. Compare Netflix & Spotify for a few $ months to buying individual movies & CDs. A lot of people spend their free time on Youtube/Facebook/Reddit essentially spending nothing at all.
A lot of younger people living in cities are no longer purchasing cars or homes. Overall travel has become a lot cheaper as well. IKEA has commoditized furniture which used to be extremely expensive a few decades ago.
Cheaper prices mean lower spending & lower GDP.
At the same time a smaller group of large companies is capturing the profits in the low cost sectors (again IKEA, Netflix, Google, Facebook). These companies are making huge profits per employee and they are facing very little successful competition.
A majority of the middle class (that doesn't work for any of these highly profitable companies) has very limited free cash flow, due to the rising cost of housing and education and the stagnation of wages. They can't afford to purchase expensive homes, expensive furniture or expensive cars.
More wealth is going to the highest earners, where each additional $ contributes a lot less to GDP than it would in the hands of a middle class household.
---
I'm throwing a lot of stuff together here, but this is what I'm missing from most discussions about the economy: try to describe trends with the concrete situation at hand rather than with generic theories that have been around for decades yet have mostly failed to predict the economic outlook correctly (it seems like the rise of behavioral economics could help here)