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Is Your Phone the Reason You Feel Broke?

Photo-Illustration: Intelligencer; Photo: Sean Gallup/Getty Images

For the past year, the political class has been wearing itself out over what sounds like a simple question: Why are Americans so down on the economy? Wages are rising, unemployment is low, labor participation is high, and inflation is slowing. Look at the Consumer Price Index! The Biden economy is pretty great, actually, and yet less than a fifth of the public will concede that the state of the economy is even “good.” Okay, but while inflation is in some sense under control, and some goods and services are even getting cheaper, prices remain noticeably high; likewise, interest rates, while no longer rising, have frozen the housing market, leaving homeowners and renters alike feeling stuck in place or worse. Look at the Consumer Price Index! The Biden economy is pretty terrible, actually, and yet seemingly nobody in charge will concede that it’s even sort of bad.

One point of agreement is that core indicators seem to have diverged from how people report actually feeling about the economy or are insufficient to explain such things in the first place. This sentimental breakdown presents as either a tricky puzzle or a severe emergency, depending, for example, on whether or not you’re trying to remain president. In the absence of a definitive story, pet theories rule supreme: about the media and the vibes; about the real meaning of high spending; about political pessimism bleeding into everything else; about various related smaller feelings adding up to a big bad mood. You’ve got to give the prices some credit, though. Nobody would suggest it’s the most important thing in the world, but store-bought Diet Coke has gone up 65 percent in five years, which sure feels like a rip-off and not not a sign that something bigger is wrong, no matter how much money you make.

America’s economic pessimism is, in other words, an aggregated expression of overlapping narratives, millions of anecdotal truths represented by a blunt number moving in the wrong direction. You can argue with these experiences at your peril, or you can try to understand them. Together, though, they represent the sort of problem that can be difficult to see all at once, to shrink down to a size one can grasp, or to express in terms that pretty much everyone understands. If only there were some kind of all-in-one product owned by most Americans that captured the defining economic contradictions of our moment. A universal thing that costs more than it used to, through which Americans also spend a lot more than they used to, that they engage with more than ever but which they’ve also come to resent. Some sort of compact, pocketable symbol of narrowly quantifiable progress experienced instead as broad emotional decline. A unified interface for the personal, social, commercial, and cultural forces that combine, or conspire, to produce fatalism. If only we all had smartphones, and they were connected to the internet.

I won’t argue that smartphones are significantly responsible for America’s sense of economic malaise. What they are is unusually helpful for understanding and interpreting this malaise in common terms. They’re a heightened, sped-up microcosm of the weird, sour vibrancy of the economic moment, little worlds in which participants are both increasingly active and increasingly worried. By most measures, the smartphone economy is booming, and yet it also feels like shit in a way that everyone can feel for themselves, together, no matter what soda they drink.

It starts with the simple question of top-line price. There’s a funny caveat in the method the Bureau of Labor Statistics uses to determine the cost of smartphones for its Consumer Price Index. Smartphones, like a lot of other things, have been getting more expensive. They’re not eggs or gas or Coke — you don’t think about their prices every week — but there’s a good chance you buy one every few years. The cheapest version the iPhone now starts at $800; the cheapest version of the flagship model, $1,200. Let’s venture to say that people have noticed this and do not love it. Since 2018, though, BLS economists have specified that, actually, due to the “rapid rate of technological advancements and improved quality to consumers,” including, as an example, increases in screen resolution, smartphones need a “hedonic quality adjustment” before inclusion in the CPI. As a result, smartphone prices have been recorded, in an official way directly relevant to debates about the economy, as going down. Makes sense, maybe. Feels wrong, definitely.

But purchases of smartphones make up a small part of a typical household budget. It’s the ongoing experience of using this device that is always with you, checked at least dozens of times a day, where one senses real change, and where we might make a crude hedonic adjustment in the other direction.

The new economy surrounding the smartphone tells a clear story. To engage with the app economy is to experience price-jacked Diet Coke on a daily basis. Call it runaway inflation in the Smartphone Price Index. You’ve got adjacent services that were once free and which now cost money: Your Google account is full, and you need to pay to store all your old Gmail; your Apple account is running out of space, and suddenly you’re paying into perpetuity to keep your photos. There are the services you subscribed to, pay for, and use on your phone that keep increasing their prices: a few dollars more for Netflix, Disney, or Max; a price hike in Spotify or Apple Music; then your running app, your YouTube premium subscription, and your insurance-recommended therapy app. There are the “free” products that don’t really work unless you pay for upgrades: job apps, dating apps, pay-to-progress games. Even the big social-media apps, which made billions on your attention and personal data, are working out how to charge users. These payments, and their prices, are almost universally the sorts of things that, while certainly possible to explain or rationalize, and individually not terribly significant, add up in an unpleasant way. You’re getting charged a higher price for the privilege of doing or getting things that, at best, feel the same. It’s a pocketful of high gas prices.

It’s not just the inflationary app economy that wears you down. As tools for participating in the broader economy, smartphones are excellent at aggregating and exacerbating subjective indicators and bad feelings into a steady feed, or a stream of notifications, on that bigger, higher-resolution screen, powered by that faster processor. A smartphone provides interfaces for your bank, your credit cards, and the places you shop and spend money, work and make money, and pay your bills; it offers a lens for the economy that is either distorted or just unflattering, depending on your perspective. If you shop with your phone — as a fast-rising majority now do — it’s where you see and pay high prices and get invited to finance them. If you bank with it, it’s where you worry about your savings and encounter questionable new financial products; if you consume content with it, it’s where you hit all the paywalls.

A decade ago, you paid for a smartphone to get 24/7 access to a world that, while demanding of your attention and full of advertising, was made up of a greater share of pleasurable, novel, or at least elective stuff: social media; entertainment; communication with friends; a bit of freedom from your desk at work, if you wanted it. (It provided value, in other words, in a way that, while not without cost, eluded measurements like the CPI.) It was, or felt like, a pretty good deal, at least the first few times you made it. Now, smartphones are an obligatory purchase with an inverted purpose: to provide the rest of your life, which followed smartphone users online, with access to you. Your time-wasting gadget and helpful companion has become one with your bills, your boss, your obligations, and, via a stream of intrusive notifications mixed in with your personal business, your stress about the world. Buying an early smartphone was like getting a fun car to drive on your own time. Upgrading in 2023 can feel like buying a car to drive for Uber. Polling suggests a familiar dynamic, here. People use their smartphones more than ever — consumer confidence! — but this also stresses them out, especially if they’re young.

You can argue with these perceptions along familiar lines. People love to complain about the smartphones that they use obsessively, and the corporations subject to these complaints are often just following the revealed preferences of their customers, testing price elasticity, and pricing their products accordingly. Their costs are rising too. Smartphones are a marvel, and it’s customers’ fault for taking for granted remarkable technological change, or for complaining when they don’t get it for free. Maybe, even with the price hikes, these services remain excellent values. People aren’t quitting them en masse. 

But maybe that’s because they feel a little bit stuck. The subjective experience remains: The device that used to be satisfied with your attention is now asking you to pay up and to do so at higher prices. Your digital subscription statements resemble self-storage rental bills, charging in the background and creeping up, up, and up. Widespread economic trends toward consolidation, monopoly, and rent-seeking manifest quickly and in caricature on phones: Online TV prices rose 24 percent in the past year, compared to about 3 percent across all goods, as content production slowed. All of this can make sense, if you need it too, while also feeling — and looking! — like a bait and switch, a series of small affronts that cost a little bit of money and a lot of goodwill, telling an incomplete but persuasive story of things moving in the wrong direction, forever — especially if you’re young. Smartphones aren’t taking all your money, or even much of it, in the grand scheme of things. But they’re taking more of it than before and rubbing it in your face. Analytically, maybe this is wrong. But again, take a look at the past week’s notifications on your phone. Would you call it crazy?




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