Why 1989 2025 should not define

3 days ago

0 0 3 minutes read

This week the headlines are full of large, daring figures. The S&P Corelogic Housing Price Index shows house prices that continue to rise. The real gross domestic product (GDP) increased by an annual percentage of 2.45% in the fourth quarter of 2024. The index for personal consumption expenses (PCI) showed An increase of 0.4% in FebruaryPlacing the inflation percentage of 12 months at 2.8%, higher than expected. The favorite inflation statistics of the Federal Reserve. These are the benchmarks that we use to assess the health of our economy.

But for the millions of people who try to buy a house, to secure a decent salary or build up financial stability, these figures do not correspond to reality.

That decoupling is no coincidence. It is the result of outdated economic systems that still form our financial lives today.

An example: The Credit Coremic Model used by Fannie Mae and Freddie Mac – The two giants

That Back 70% from American mortgages – is based on the Fico formula from 1989. That is the same year that the Berlin Wall fell, Nintendo has released the Game Boy, and The Little Mermaid Opened in theaters. Since then we have witnessed the explosion of the gig -economy, the rise of online banking and a dramatic shift in how Americans earn, publish and save. But the model that determines who is approved for a mortgage?

Still stuck in the past.

In 1989 the average borrower was a traditional payroll, paid bills per check and built credit through regular lenders. Nowadays, the millions of Americans do not reflect the multiple jobs, freelance, driving for Rideshare apps, or managing entire household budgets without credit cards. People now earn income outside of traditional wage systems. Many people pay for essence with payment cards or cash, no credit cards. And yet these people often pay on time, cover all their accounts and support entire families – but because they do not fit into the fungus from 1989, the system treats them as credit risks. Not because they are risky, but because the model was never built for them.

It is not only credit scores that are stuck in the past. So is how we appreciate work.

In 1989 the average family income was $ 28,910,000.

Today it’s all about it $ 80,000. In the meantime, the costs of living has more than doubled and GDP has tripled per capita. However, our compensation systems still cannot reflect the contributions of working women, care providers and non -traditional employees who are the backbone of the modern economy. Nowhere is this clearer than in childcare. Parents are forced in impossible choices as the costs rise. Between 1990 and April 2024, the price of daycare and kindergarten rose 263%, almost double the pace of total inflation. For many families, both parents in the workforce are no longer useful. And when this is the case, women are the likely parent who leaves the staff. If women participated in the workforce at the same pace as men, the US could see A $ 4.3 trillion boost to the economy by 2025. When healthcare providers are pushed out of the labor market, it does not harm families alone, it weakens the economy.

And although inflation statistics can suggest that improvement, the things that are most important, such as housing, childcare and health care, are still pay slips. The house prices climb and the mortgage interest rate remain increased. For many, the homeowner is now further out of reach than during the big recession.

The result? An economy from 2025 that measures and manages the 1989 rules. That is not only outdated, it is untenable.

It doesn’t have to be like that. We have the data, tools and technology to build a system that reflects how people live and work today. That means modernizing credit form models to record real-world behavior, to reconsider how we appreciate income, labor and care, and measuring economic growth in ways that reflect the real costs and realities with which families are confronted.