Cost-cutting, quiet guilt and the inflation generation

0:00This week on Consider This, the researcher who just resigned from anthropic, why he believes AI is a threat to humanity. Very soon, these things are going to be so capable that if they decide to go rogue, it's not going to be good. Plus, his view of what guard rails could look like. This week on Consider This from NPR. This is Planet Money from NPR. How are you doing? We know what it's like out there. We've seen the stats on the economy. We also know the stats don't fully capture what you're all dealing with. We know this because we asked you to tell us how you've been doing, and we heard back from many of you. Hello, Planet Money. I'm Alan Miller from Blue. My name is Lindsay Cole. I'm a professor. I'm Rick Schultz. I'm retired. My name's Stephen Lloyd. I'm 24. My name is Josh Buck. I'm a truck driver. The economy is treating so many of you. Listeners vary differently right now. It is boom times for some, bleak for others. It's kind of like the everything, all that one's economy.

1:0077% of Americans say they're stressed about their finances, but if you own assets like stocks or property, you might be feeling good right now. Homes have appreciated so much. And if you're open to selling your home? That was a huge win when I sold it. I got quite a nice pocket full cash. Nice. The employment is also relatively low overall, but the people who are unemployed right now are unemployed for way longer, because turnover is so low right now. It's hard to find a job or leave a job. It is just absolutely brutal. I have so many applications out there that have just gone absolutely no lit. Wages are up a tiny bit, but not for everyone. So my entire paycheck only covers my child care payment and my student loan payments a month. That is it. And then it is gone. Inflation also down from its peak to 3.4%. But that still means that prices are 3.4% higher than they were this time last year. And this is an average right? So the price changes for specific goods can be much less than that or much, much more.

2:05Two years ago I could get a two liter of brand name soda on sale for a dollar. Today it's on sale for 350. That doesn't feel like 3 or 4%. You know, it feels like 8 or 15 or in some cases 100%. After hearing from you, a few themes popped up. The economy is pushing some people into hyper price consciousness and others into the most comfortable period of their lives. And then there are those whose entire economic views are being shaped by this moment. Like I was just like thrust into a world like that. This is 17 year old Leo Vamaka who spends so much of his time thinking about. Honestly spending money. How much money I have. We're going to spend a little time with Leo who was part of the newest generation of consumers. Leo is a high school senior and he has two jobs. I've been working since, well, I guess I've been working since I was 13. But a lot of it was under the table, I would say. You sure you want to tell us that?

3:06Yeah, you know, like scorekeeping hockey games and stuff that. That was a lot of like what I was doing. When Leo started working, making money and spending money, it was four years ago. When we had peak inflation. Inflation that so many of us had never seen in our lives. So much of what he's known is this era of inflation. Even as I make more money, I'm like, where is it going? Where is it going? Because the prices increase, you know? Oh, well, you know, Leo says he and his friends have started doing some old school coupon clipping. It definitely caught on this year and has become much more of a thing. Are you guys like a coupon crew then? Yeah, I mean, you could say that. We'll put it in the same CVS, right? We'll like, caravan over there together. The latest price conscious inflation generation has entered the economy. Hello and welcome to Planet Money. I'm Sarah Wenzellis. And I'm Erica Baris and we are checking in with you our Planet Money Community. Because we're all trying to figure out this confusing economic moment.

4:07Today in the show, we hear about your extreme cost cutting, the quiet guilt you're feeling from your own economic luck and consumer habits forming in the younger generation. When you grow up around economic volatility, it can affect your beliefs and your behavior for the rest of your life. This message comes from pure insurance. When shopping for home insurance, reviews and prices are common considerations. But what about the motivations of the company behind the policy? Pure insurance is motivated by its members. That guides the decisions pure makes every day, including who benefits when the company does well. To date, nearly 170 million has been allocated to members. Learn more and see what membership means at pureinsurance.com. Proletch underwriters reciprocal exchange. Hey, you know that nagging voice in your head? The one telling you to put the phone down and stop doom scrolling? Well, it's time.

5:07Look up. Take a daily curiosity break with Shorewave, NPR's Science Podcast. Let your mind wander to the edges of outer space, or wonder about what's lurking in the depths of the sea floor, all in under 15 minutes. Shorewave, your daily mental reset. Listen on the NPR app or wherever you get your podcasts. When we asked listeners to check in, we did hear from a decent amount of you who said you're actually doing pretty good in this economy. But we also heard from many of you who are struggling. You're changing your behavior and consumer habits in big ways. I mean, honestly, from being honest, when we read your email unanimously, we were like, wait, a professor is going through all of this and dealing with all of this? Yeah, so I think there's a lot of misconceptions around how much money people think professors make. This is listener Lindsay Cole who wrote into us. And I'm sure, you know, if you worked at an Ivy League, you make decent money, but most of us make probably what public school teachers make.

6:08At least that's what she's been making, teaching forensic psychology at a small liberal arts college in the Northeast. Her husband is also a full-time professor at a different university, so dual income, but it's been very tight for their family. So I have two boys. They have a six-year-old and a four-year-old. They're very active boys. Currently, they like to stand outside in spider-mount costumes, hoping cars hung, and you know, kids alone. It's expensive. You know, we know things are more expensive. Inflation has been sticky. I feel it. Every day. But Lindsay, in particular, stood out to us because what she deals with on a day-to-day basis takes us beyond the numbers and what the stats miss. Take wages, for example. Technically, nominal wages have gone up, meaning the literal dollar amount on paychecks, but just slightly. They're growing at 3.1%, but when you factor in inflation, which is 3.4%, right now, there is no real wage growth on average. We collectively are making less money when you factor in inflation.

7:08And of course, not everyone's seeing any wage growth at all. I haven't gotten even a cost of living adjustment, and I don't know how long. Like, and we know how much inflation has been. I mean, I haven't gotten, we've gotten costs of living adjustments of like two and a half percent. And you're like, yeah, it's not keeping up. And inflation's more than that, absolutely. And we're not even getting that. It's literally just stagnant. And actually this summer, she kind of got a pay cut. She used to get a flat fee for teaching a summer course, but the college changed the pay structure to a per student rate. $400 for every student she brings in. The competitiveness that it's going to create amongst faculty of, you know, coming on, you'll basically get an A in my class. There'll be a lot less work. And so, yeah, those ones are going to do great. So I'm just seeing that. That professor, Lindsey. Well, I mean, you know, you have standards for yourself. But when it's really digging your livelihood, it's hard not to feel the pull of that.

8:10Lindsey got paid less this summer for teaching two classes than she got last summer for teaching one class. And she was really making on the full summer pay, because she's got this van. It is finicky. My kids call it ghost van, because it'll turn itself on and off randomly. The car turns on and off. But, yeah, no, no, the car. The car turns on and off. Sometimes I sit in a parking lot for 10 minutes trying to get the car to just stay on or stay off. What a waste of time. And then the AC on the van just busted this summer. They had plans to finally put a down payment on a new car. But when the summer pay structure changed, that went out the window, which is always open now. So we're driving around with the windows down. We had like a week where it was like 100 degrees outside. And when I went to pick up the kids from camp and daycare, I had like packs of cold washcloths for them to hang on their next bowl. We were in the car so they wouldn't get overheated. Lindsey says people are often surprised to hear that two full-time college professors

9:11can't afford a setback like a busted car or even a simple pleasure, like a play date for their kids. That stings a little bit, right? But working professionals, like I should be able to let my kid go with their friend to the trampoline park every once in a while. Lindsey feels like she and her husband followed all the rules. And did everything they were supposed to do. We should be on the upswing of the K-shaped economy. And we're just not. Are you just naturally interested in econ because you've thrown around some econ a couple of times? Yeah, I mean, I probably learned it from you guys to be honest. All right, the K-shaped economy, which many economists say we have right now, though there are some skeptics, is basically one economy with two different experiences. Some people are spending big, increasing their wealth, and on track to continue. So they're on the top half of the K with the arm of the K going up. While others have slower spending growth, stagnating or decreasing wages and growing debt

10:12and are on track to continue that. So they're the bottom half of the K with the leg of the K going down. Now, Lindsey and her family are not at the very bottom of the K. They own a house, they can afford childcare so they can work, but they are struggling. I think it's also kind of crazy when you hear people like politicians saying, like, everything is fine because this one group of people is doing amazing and look, they are spending and like, wow, yeah, good for the overall economy. But I'm not taking a shower tonight because I'm trying to keep my water build up. Yeah, Lindsey and her family, they're not spending big right now. They're actually rationing. Rationing the kids snacks, electricity, the hot water. Yeah, so the kids used to take separate baths and now they're forced to take water. That's again for bath because I'm just like, we have to get through until the gas prices drop. Because I don't want to pay. The hot water in Lindsey's house runs on heating oil and the high price of crude oil right now is also keeping heating oil prices high.

11:15It costs like $1,300 to fill up the tank in her house. And I think I told you I've switched up some of our oven usage too to try to keep the electrical costs down. This is what Lindsey wrote to us about her oven usage. And I don't think I'm over sating this. Lindsey basically plans her whole life around when she's going to turn on her oven. Because Lindsey likes good bread, not cheap-o sliced bread. So she's baking their family's bread and muffins to try to save money. And I had rationalized keeping it going because I was like, I'm saving us so much money from not buying that $10 loaf of bread when I go to the grocery store. And then somebody said to me, yeah, but it cost so much money to run your oven at like $455-100 degrees. And it kind of clicked. I was like, oh, am I even saving us any money by doing this? And so I pulled up last year's bill. I pulled up this year's bill. And then I was paying attention to the actual usage like the kilowatt hours. She's tracking their family's kilowatt per hour usage.

12:17Not because she's like into this stuff because she needs to squeeze out any cost savings she can. Where if there's a particularly cooler day coming, like I'll save the baking for that day? No, you do not. I do. I absolutely do. This is, you're doing so many like mental gymnastics. It's the water usage. It's when to use the oven. I mean, you know, because you teach psychology. But this is what they call like the cognitive burden. The cognitive load, yeah, yeah, or the cognitive tax for like trying to make the finances work for your household. It is. Yeah. The cognitive tax isn't just about the mental load for Lindsay. It's about all the things she's not doing for the larger economy because her brain and time are so tight up trying to save money. Like the energy you're expanding is taking away from other things that you could be doing. Like it's like you are less good at doing your job. Oh, because you have your dealing with all this other stuff.

13:19Yeah, less good at a lot of things, right? But if you could be saving $2 here and $2 there, like I think those drops in the bucket will add up at some point. And I do feel this sense of guilt about not not making the effort where the effort could be made to make a difference for my family. And this is why her email really stood out to us because you have a professor here putting so much mental energy and her analytical research skills towards questions like does it save money to bake bread versus buy it when you factor in electricity cost in the middle of the summer. And that cognitive tax, it is worse for people who are much lower income than Lindsay. But even for Lindsay, there is kind of a silver lining that this odd economy is offering. Like I know Trump keeps saying, how's your 401k doing? Like it's doing great. But what do I do with that? I can't use that for another 30 or 40 years. So like yay, my retired self. You said your retired self is looking pretty good though. Well, I mean compound interest, right?

14:23Yeah. And speak in a retirement? Yeah, we're very, very, very lucky. There are some real winners in this economy, like some people whose retirement accounts are allowing them to live more comfortably than they even like to admit. Also, we hear more from 17-year-old Leo and the potential generational impacts of living through inflation spikes. That's after the break. I haven't seen my son since 2012. This is Deborah Tice. The disappearance of her son, Austin, is one of the biggest missing person cases in the world. What do you want from me? I should settle for the mystery. I know that my son is somewhere alive. Listen to Where Is Austin Tice from MPR's Embedded and BBC Radio 4 on the MPR app or wherever you get your podcasts. This week on Here and Now Anytime, 25 years after 9-11, we asked you how your life changed.

15:26I did not appreciate that day how much September 11th would come to shape my adult life. We also talk about the long shadow of Islamophobia still hanging over the country. Listen to Here and Now Anytime on the MPR app or anywhere you listen to podcasts. This week on Weight Weight Don't Tell Me, we talk with our panel, Joy Elnick Oljonson, Peter Gross, and Tick Nattaro about the new trade war with Canada. I can't imagine maple syrup being any more expensive, like it costs as much as a car. That's true. What kind of car are you buying? Don't miss our full conversation and the rest of our games listen to the Weight Weight Don't Tell Me podcast in the MPR app or wherever you get your podcasts. Okay, so some of you who wrote in were more the lintes of the economic moment, you know, really jumping through hoops to make money stretch. Others were more of a wreck, retired, and feeling good. You said that a lot of your elderly friends, your words, are in a similar situation financially as you, and then you put, and we do not talk about it much.

16:33It's like that's not a conversation. No. This is Rick Schultz who said he is very, very, very lucky right now. Well, yeah, we are. We're very, very fortunate. I mean, you emailed us and said your income exceeds your daily expenditures by nearly $2,000 a month. Yep, we're pleased to win on a fixed income. That's pretty good. Yeah, we're very, very, very lucky. Rick is not rolling in it. Okay, he's still paying off his house, paying a mortgage. He doesn't feel at all stressed about finances, but he notices that prices are high. Well, eating out, you see that and you see filling up your daughter's minivan is a lot more expensive. Do you fill up your daughter's minivan? Oh, an occasion. Oh, that's a good dad. How does your daughter? Hi, she is. I'm supposed to know this right now. I think she's 38. Now, I'm going to get that wrong and I'm going to get in big trouble. It's okay. We'll correct it. We'll change it later. His daughter is 41. You check the middle.

17:36She'd have important dates on his phone for that one. And one of the reasons we wanted to talk to Rick is because he represents a version of the American dream and retirement that is fleeting. The fulfillment of a kind of economic promise that for younger generations feels broken. When Rick emailed us, he wrote, quote, one under reported economic story is the number of older retired people that are living very good economic lives in their old age. And there are a few reasons for that. One, real estate. If you own property, your homes have probably gone up in value. Another is the stock market. If you have money in there, I mean, the stock market over the past several years is on an incredible historic streak. It is just up, up, up, up, up, up, up. And if you're retired, like Rick, that's probably where your money is. IRAs, individual retirement accounts, 401Ks. I'm not sure some of that, but also he has a pension too, actually. He worked for the state of Kansas and the state of Iowa doing mental health and disability services jobs.

18:41So you have pensions for the rest of your life from both states? Yes. Yes. Rick says there are some tradeoffs to working in public service jobs. It's not a path to riches necessarily, but he says it is a path to security. The salaries are not that wonderful. Benefits are great. Rick also invested in a personal retirement account. He said he and his wife invested early in their mid 30s and quite substantially. Even when it was difficult for us to do so. Even when it was a challenge for us financially. Investing advice has always been to put money into a retirement account as early as possible and choose risky investments in the stock market when you're still years away from retirement. Then less risky investments like treasuries when retirement is around the corner. And that is what Rick did. So a part of him feels like, yeah, he made the sacrifices early, but also he kind of just got lucky that he was born and he retired at the right time when the stock market experienced these gigantic booms and his money compounded.

19:44Rick feels a lot of guilt over this actually because he says what he was able to do in his 30s. He doesn't think people in their 30s today can do. We could figure out how to squeeze the money out of our budget. But nowadays the cost of living has gone up so much. There's so much less flexibility for younger people to do the same kind of investing. We heard from a lot of you who felt this exact same way you said you were doing fine, but your kids are struggling living at home or they want to do some of the big milestones like getting engaged by a house, but they're just not there financially. And when you hear people talk about, well, you know, the younger generation they just have to pull themselves up from their bootstraps. Do the math. That's what I, that's what I like to tell people do the math. It's not the same. You like to think it's the same. It's not the same. All you have to do is look at rent and look at what the minimum wage is. Rick is refreshingly thoughtful about this stuff. He says he got where he is now, not just through smart decisions that he made and pensions and investments, but also because of these programs that he and his wife benefited from.

20:56Like Rick got a federal first time home buyers tax credit. Well, I looked it up before we before I called you and said, do they still have that? No, they don't have that anywhere. They haven't had it for years. There are some home buyer tax credit still, but the one that Rick got doesn't exist anymore. Another thing, Rick's wife, she got a job that qualified for student loan forgiveness. People talk about student loan forgiveness is like a sin now, but we had access to that. I didn't realize it does feel like it's like a new thing. I didn't even know you guys took out loans in the 70s. That college was like 100 bucks a month. Well, see, that's the other thing. Higher education was cheap. There was bad unemployment in 1975 when Rick graduated college. You could only get a minimum wage job, but he lived and saved just fine with that. He says, can you imagine that you've never happened today? Like, like, meaning like you could rent your own apartment and buy your groceries? Oh, yeah, I did when I graduated and you could make it. You could find a way to make it. So much of what was available to Rick has to do with timing.

21:59Now, just like what was going on in the economy, what programs existed when he entered the labor market and had all of his big financial milestones? Think of all the people who entered the labor market in 2008, 2009 during the financial crisis. As a generation, millennials started working at depressed wages. It took more than a decade for them to catch up. And many still haven't caught up. Literally your economic fate can come down to just the year you were born, which brings us back to Leo. The 17 year old who has only ever known high price breaks for Leo gas has been the real killer. Yeah, when gas hit $5 gallon and I was going to the pump and I was like feeling it like in which I was like, no, stop going up. Oh, I was waiting for the click and it's like still going up. Leo lives with his parents, right? So he doesn't have to pay rent. He doesn't have bills, but his parents don't pay for everything. They have drawn a very defined line on we're not paying for any of your food. If you're getting food outside of the house, it's you're paying for it.

23:01Hence the two jobs and the coupon clipping teenagers got to eat. And the reason we're talking to Leo is because he's just starting to figure out how to be a savvy consumer. How to budget, find deals, but he's only ever done that in this era of volatile prices and bouncing inflation. His whole life has been cheap by this. He sees it everywhere, his extra curricular activities. Leo's a boy scout. He's one of the grub masters for his troop, which is the person who has to do the grocery shopping for their camping trips. We actually cooked a full, like suckling pig and presented it for a contest. Yes, we can't really cooking. You're cooking like real food. Oh, yeah, yeah. We've got some some very good chefs in our troop. And a lot of what goes into cooking is buying good ingredients. Leo with his troop leaders and fellow boy scouts has to budget how many dollars they can spend on ingredients per boy scout. So what it is is per boy, per meal breakfast is three lunches for dinner is five.

24:01Okay. And we had to raise it to four or five six per meal respectively because of the price changes. Leo is trying to find deals for like nine households worth of people looking for the best deals on butter, on 30 pounds of potatoes, on sausages, peaches at age 17. And like any good budgeter, he's putting some limits on the boys. It's the only way to run a household. We've been going a little lighter on the lemonade people would use to put like bigger scoops in their bottles and then we've like started watching a little more like you get one scoop one scoop that's barely lemonade. Unless they want to bring a lemon themselves from home and even small penny pinching measures like this they can shape you plenty of studies have found that living through economic shocks can rewire your brain make you more more price sensitive change your relationship with risk it can even change your expectations of inflation itself make you feel like inflation can always be around the corner. And as we've covered before when people expect inflation it can lead people to behave in ways that contribute to inflation.

25:07For now Leo's mainly just buying teenager things like he just ordered buster rhymes and MF doom CDs. But I think I'm paying full price for those ones. So yeah, not everything in his life is about thrift. It can be hard to talk about personal finances, but these are things we're all thinking about and experiencing and so we're grateful to all of you who wrote in and shared your stories with us. And if you have an economic experience that we didn't capture let us know we read every email and Spotify and social media comment even if we cannot reply they really shape how we think about what stories we do. So please keep on keeping in touch planet money at mpr.org or at planet money on basically all the social platforms. And as always super extra special thanks to our NPR plus supporters who get sponsored free listening and bonus episodes and occasional live shows where you can ask us questions.

26:08You can sign up to be an NPR plus supporter also at plus dot NPR dot org. This episode of Planet Money was produced by MAP Easily and edited by Alex Goldmark with reporting help from Charlotte Isador. It was fact checked by Sierra Huattas and engineered by Robert Rodriguez. I'm Sarah once I list and I'm Erica Barris. This is NPR. Thanks for listening. On the next through line from NPR. Let's listen to Josh Reddick's new walk up song. Whether you love it or you hate it walk up music has become a huge part of major league baseball. The need to secure the attention of the fans is relentless. I thought am I hearing things? I mean I realized everybody's singing along. Listen to NPR's through line in the NPR app or wherever you get your podcasts. Hi there I'm Brittany Loose and not to brag but I host a really fabulous podcast. It's called it's been a minute. I love making it and I think you'll love listening to it.

27:11Over the last year hundreds of thousands of listeners have been tuning in and I gotta say if you haven't yet you're missing out. Listen to the it's been a minute podcast from NPR today. The NPR app cuts through the noise bringing you local national and global coverage. No paywalls, no profits, no nonsense. Download it in your app store today.