Worth pointing out that something being bad for the economy, from this perspective, isn’t necessarily the same as being bad for the population. Median incomes are stagnant and quality of life is declining in the US. In part, I’d argue this is because hyper scaling and overoptimising are squeezing the humanity out of most economic life, and most people are not benefitting from these trends.
There are exception: we need big companies to make GPUs, probably. But it’s not clear to me that this logic applies universally. Some inefficiency is probably going to be good for public wellbeing.
But they're not? Adjusted for inflation, median US household income is 18% higher than fifteen years ago and 32% higher than it was thirty years ago: https://fred.stlouisfed.org/series/MEHOINUSA672N
You could say it was stagnant from 1999 to 2015, though.
However, because big-ticket items we all buy (housing, healthcare) and items many of us buy (education, childcare) have increased much more rapidly than inflation, the overall impact has been a deterioration of financial stability for many Americans.
But note that some of the change here is people building and buying larger houses as we get richer, which inflation calculations account for and this division does not.
Average rent per square foot since 2014 has increased by 42% [1]. By your unadjusted income chart, incomes have only increased by 33% in that time. In my case, existing just to the left of the income median, that's meant going from comfortably affording a 2br apartment and weekly dinner out, to barely squeaking by in a small 1br. Add in a $600 car payment (which I have managed to avoid), and it's not possible to live reasonably.
For many people housing isn't part of a basket, it is the basket.
If food prices go up, it hurts psychologically but it's not the end of the world. I can buy cheaper food, I can buy less food, I can eat out less. Most people in the developed world are very far from food price-induced famine. I can buy a year's worth of sustenance for a thousand dollars, it might not be healthy but I'm not going to die.
Housing is qualitatively different. Many renters are only a few steps away from homelessness, and more people rent nowadays because they cannot afford to buy. It's hard to adjust for increases in housing costs by buying cheaper housing, your housing is linked to your income.
I complain about but don't ever worry about food prices, yet the roof over my head is a real cause for concern.
For my parents' generation it was the opposite, being overweight was more uncommon, housing was dirt cheap, people worried about getting enough calories rather than too many. Indexing wages to inflation is an anachronism that we have taken into this new world.
> It's hard to adjust for increases in housing costs by buying cheaper housing
I think this is mostly not true? You can adjust for housing becoming more expensive by changing your consumption patterns, just as you describe with food. It's still rough, but unless your family is living in single room in a shared unit (or, if you're single, sharing a room) there are choices between "consume housing at your current level" and "be homeless".
If we’re comparing ourselves to Europe we are certainly not worse off (or anyhow the portion of the population that is worse off is not evaluating whether they should work at FAANG or a startup). Any serious discussion has to start from acknowledging that we are richer.
But we do want them considering our hesitation at paying for things without ads, especially when a free gmail, google maps, google drive, etc is available.
There are exception: we need big companies to make GPUs, probably. But it’s not clear to me that this logic applies universally. Some inefficiency is probably going to be good for public wellbeing.