US economic data: Why the TikTok generation sees the USA in a deep economic crisis

The
USA are currently experiencing a recession that is even deeper than the Great Depression of the 1930s. This may surprise many readers. After all, the US economy has recently grown by almost five percent, while Germany is stagnating at best. The unemployment rate is 3.9 percent, which is the lowest it has been in 50 years. Even the latest inflation data shows a positive trend. After the inflation rate was still over five percent in the first half of the year, it fell to three percent in October.

But especially Gen Z, those born after 1997, feel in a deep place Economic crisis. On TikTok, videos garnering the approval of hundreds of thousands describe life in the 1930s as far better is considered your current situation. “We all know how hard it is to make ends meet in this broken country,” complains Isabel Brown in a video that received 196,000 likes. Another TikToker explained: “We live in a silent depression.”

In a “silent depression” because politicians like President Biden and the media are supposedly keeping quiet about the suffering of the young generation. For comparison, during the Great Depression, a quarter of the U.S. workforce was unemployed. Between 1929 and 1933, economic output collapsed by a third and millions lost their homes
lived in so-called Hoovervillesslums that were called that because the then-President Herbert Hoover was blamed for the crisis. At least there was no inflation, on the contrary: prices fell by 25 percent.

However, this may have been little consolation for the army of those who were dependent on the soup kitchens to feed the poor. How can it be that young adults compare this hardship to their own situation in 2023? One could easily make fun of the ahistorical whining at a high level. But the TikTokers and their fans are less concerned with a historical comparison and relevant statistics than with their attitude to life. And it has indeed become more difficult over the past few decades to achieve milestones such as owning your own home and owning your own car.

The pandemic and the subsequent price explosion – at its peak, the inflation rate reached almost ten percent – have increased economic uncertainty, especially for the generation that came of age during these times. Sure, average wages rose by 16 percent in nominal terms. But the
Home prices have risen 32 percent, and monthly mortgage payments for new buyers have increased by nearly 300 percent thanks to the Federal Reserve’s interest rate hikes. The average cost of new cars is now well over $48,000 – nearly $6,000 more than two years ago and about $10,000 more than September 2020. And because of poor public transportation in much of the country, Americans continue to rely on their cars to get to work or college.

The White House welcomed the youngest
Inflation data as proof that Bidenomics works. But consumers don’t look at the inflation rate, but rather at the prices they have to pay in the store or at the gas station. And they are noticeably higher than the prices they paid before the pandemic. The average price of gasoline in 2019 was $2.60 per gallon, or 70 cents per liter. In October the price was $3.70, which is one dollar per liter.

This also explains why in a survey by the Gallup polling institute 60 percent of those surveyed said, the price increases meant “financial hardship” for them. And even if wages have increased since February grow faster than inflation, most Americans still feel poorer than they did before the pandemic. But the price shock alone does not explain the concentrated frustration that is expressed in the TikTok videos, among other things.

There is a hint of this in the comments below – for example in the questions about the profits that the companies received. Gen Z’s anger stems only in part from current economic conditions, but rather from factors that have increased over the past 40 years: the country’s high and increasing inequality, coupled with greater economic insecurity due to greater income fluctuations and a reduced social network for the majority of households. “A deep-seated anger that the economy is ‘rigged’ was simmering long before the pandemic,”
Betsey Stevenson believes Professor of economics and politics at the University of Michigan.

In fact, competition in the US economy has decreased significantly over the past 40 years and at the same time the concentration of corporate market power has increased significantly. According to a study by the analysis firm S&P Global Market Intelligence, in 91 of the 157 primary economic sectors examined, the five largest US companies in terms of sales account for at least 80 percent of the total revenue of the companies in their respective economic sector. It was in 2000 According to the analysts, this was “only” the case in 71 sectors of the economy.

With market concentration, the market power of the remaining providers also increases, not only in terms of price setting, but also employee remuneration. Since the beginning of the 2000s, the share of employees in company income has fallen from almost 85 percent to 75 percent. Accordingly the proportion of shareholders and owners increased.

The TikTok comparisons to the Great Depression may not correspond to historical facts. The feeling of deep economic injustice is certainly true, and no amount of “objective” statistics and encouraging claims from President Joe Biden’s campaign will refute it. Only fundamental reforms and enforcement of antitrust law can do this – which Biden certainly advocates. But even if he is successful, it will take time. It will probably be close for Biden to be re-elected next November.