If you like your situation right now — your job, your house, your car — you can keep it. If you aren't so satisfied, well, tough luck, because you might have to keep it anyway. Making a major life change, especially an upgrade, is going to come at a cost — one that many Americans would rather avoid, if they can manage it. Welcome to the "trapped in place" economy.
"If you are trying to move, buy a car, whatnot, then you have all these bad buying conditions on top of everyday high prices, so it's a double whammy," Joanne Hsu, the director of consumer surveys at the University of Michigan, told me.
The past four years have been filled with upheaval, though economic news has recently been on the upswing. Still, while there's been improvement on a macro level, on a micro, day-to-day level, there's a real sense of stasis. Inflation is falling, but prices are still much higher than they were before the pandemic. Interest rates are elevated. The labor market has cooled off somewhat, making it less advantageous to hunt for a new job. Everything seems stuck, and if you're looking to switch it up, it's going to cost you.
Take the housing market. Home sale prices have come off of their 2022 peak, but they're still 47% higher than they were in 2019, according to the S&P CoreLogic Case-Shiller National Home Price Index. Even if you manage to find a deal, getting a loan is going to be costly. Thanks to the Federal Reserve's interest-rate hikes, mortgage rates are much higher than they were just a couple of years ago: somewhere around 7%, compared with just about 2.5% in 2021. Not only do these high rates weigh on prospective buyers, but anyone thinking of selling their home — hello, boomers — is likely to be turned off because their current mortgage rate is probably lower than a new one. With both buyers and sellers feeling the squeeze from higher mortgage rates, and with homebuilders unable to keep up, the inventory of available homes has collapsed. And as much as a lot of people would like to see a housing-market bubble burst, that's probably not in the cards.
The car market is in a similar situation. Vehicles are expensive. Loans are getting tougher to come by, and even if you manage to get credit, elevated interest rates are making financing costly. Car insurance is much more than it used to be, too. The Bureau of Labor Statistics' most recent consumer price index indicates the cost of car insurance is up by more than 20% over the past year.
Dana Peterson, the chief economist at the Conference Board, told me its consumer confidence survey suggests people have increasingly been scrapping plans to buy homes and cars. Given the economic challenges, that's not surprising. She added that consumers expect inflation and interest rates to come down, meaning that many may hold off on some big purchases until things improve.
"If you're a rational consumer, you'll say to yourself, 'Well, maybe I'll just wait,'" she said.
The issue is, of course, that not everyone is in a position to wait. It's one thing if you want to buy a new car because you're bored with the old one, but it's another thing if your car breaks down and you can't get to work. Regardless, waiting isn't particularly fun.
Employers are hiring as if there's a relatively weak labor market, not a strong one.
When it comes to work, the vibe is static, too. Yes, the labor market is strong, but it's not a great time to go looking for a new job. Companies aren't laying people off en masse, but they're also not bringing employees on board quickly. Hiring has slowed significantly from where it was in 2021 and 2022. And, it's much lower than one would expect with the current unemployment rate.
"Employers are hiring as if there's a relatively weak labor market, not a strong one," said Matt Darling, a senior employment-policy analyst at the Niskanen Center, a center-right think tank.
The downshift in hiring has also tipped the balance of power back toward employers. While wages are still on the upswing, switching jobs may not come with as much of a pay bump as it did during the Great Resignation of 2021 and 2022. That may be fine for those who are happy in their jobs, which many people are, but it's not so great for those who are feeling a little antsy or underappreciated. And for those Americans who find themselves out of work and looking for a new gig, it's going to take a minute. Darling told me that for the unemployed, it takes about twice as long to get a job as it did before 2008. A job search that used to take 10 weeks at a similar unemployment rate now takes 20.
"That's obviously a huge source of dissatisfaction, because 20 weeks is a long time," Darling said. "What's that, five months to be looking for a job?"
What this all translates to is a scenario where some Americans feel trapped. They can put food on the table and fill up their gas tanks, albeit at a price they'd rather not be paying. But it's hard and expensive to move up the ladder in many meaningful ways. In a consumerist society that encourages people to want more and a culture that prizes itself on economic mobility, this level of stillness is uncomfortable. While it's still possible to get a better job or a new house, those things feel like they're off in some nebulous future, out of your control.
Tamara Charm, a partner in consumer insights at McKinsey, told me that, if anything, a lot of people are shifting in the opposite direction and downgrading where they can; at the grocery store, some people are switching to private labels and generic brands to save money. She added that while people feel boxed out of big-ticket goods, they're still spending on treats — on vacations, on cosmetics.
"What we've seen is that consumers are both wanting to trade down, given all these economic concerns, but at the same time they want to splurge," Charm said.
If you can't buy a house, you may as well get that plane ticket.
Americans are much more bullish about the economy than they were six months ago, but they're not as satisfied as they were in, say, 2019, and it's not clear if they ever will be. It's impossible to predict what's ahead, and while the present is decent, the feeling of stuckness kind of sucks.
Emily Stewart is a senior correspondent at Business Insider, writing about business and the economy.