A recent article in *The Economist* , titled "America's Affordability Crisis is (mostly) a Mirage," argues that while Americans widely complain about "not being able to make ends meet," macroeconomic data shows American households are actually in better financial shape than before the pandemic, and the fear of not being able to afford housing is an illusion. In contrast, Taiwan, while benefiting from the booming artificial intelligence and semiconductor industries, which have boosted GDP and asset values, suffers from uneven wage distributions and a high housing price-to-income ratio, making it difficult for most people to feel the benefits of economic growth. Is the inability to afford housing in Taiwan an illusion or a "Taiwanese disease"?
Americans' fear of "not being able to afford" is actually an illusion.
The Economist's main argument is that despite widespread complaints of "not being able to make ends meet" among Americans, macroeconomic data shows that American households are actually in better financial shape than before the pandemic. This phenomenon is known as a "mirage," or an illusion.
Income actually outpaces inflation
The article points out that since 2019, prices in the United States have risen by about 20%. However, during the same period, the median hourly wage for American workers has increased by about 25-30%. The inflation-adjusted "real wage" has risen. This means that the average American can now buy slightly more in an hour than before the pandemic.
Americans are still consuming
If Americans truly couldn't afford things, they should have cut back on spending. But data shows that consumer spending remains strong.
US retail sales and personal consumption expenditures (PCE) continued to grow, showing no signs of recession. Data shows that people are buying not only necessities but also entertainment, travel, and non-essential goods.
Why do people have the illusion that they can't afford it?
If the data is so good, why do Americans still feel poor? The Economist offers psychological and political explanations:
Price level vs. inflation rate
Economists look at "declining inflation" (prices are rising more slowly), while the public looks at "price levels" (eggs are still twice as expensive as in 2019). The public expects prices to "fall back down," but this rarely happens economically (that's deflation, usually worse). This "price memory" causes pain.
Frequency bias
People are extremely sensitive to price increases in frequently purchased items (such as food and gasoline), even if these items represent a small percentage of their total spending. Conversely, they are less sensitive to price increases in less frequently purchased items like televisions and electronics.
Political Narrative
Politicians (especially Trump and Republicans) have repeatedly emphasized the narrative of "economic collapse" and "worst in history" for electoral gain, which has deepened the public's negative perception.
Taiwan's current situation: Is it an "illusion" or "real pain"?
This phenomenon is also common in Taiwan. Official data often boasts "record-breaking wage growth" and "impressive GDP growth," but the public's perception is that "lunchboxes are getting more expensive" and "housing prices are hopeless." Compared to the situation in the United States described by The Economist, the situation in Taiwan is as follows:
The overall data is even more like an illusion than that of the United States.
Benefiting from the AI server and semiconductor boom of 2024-2025 (TSMC, Quanta, Foxconn, etc.), Taiwan's GDP growth is impressive, and export data has repeatedly hit new highs. The Taiwan stock market has repeatedly reached new highs over the past two years, resulting in significant asset appreciation for those who invest in stocks and ETFs. The purchasing power of this group is also remarkable, as evidenced by department store anniversary sales and the surge in overseas travel.
The despair of the house price-to-income ratio
In Taiwan, however, apart from the semiconductor and technology industries, wage growth in many traditional industries and service sectors is not keeping pace with inflation.
Taiwan's housing crisis stems from its extremely high price-to-income ratio. The rate of increase in housing prices in Taiwan has long outpaced basic wages, leaving young people with a sense of helplessness that "no matter how much money they save, they can't catch up."
The perceived inflation based on the "bento index"
Although the official consumer price index is low, the increases in "dining out" and "rent" that people feel most acutely are often much higher.
The psychological impact of a 50% price increase—from 80 yuan to 100 yuan and then to 120 yuan—is far greater than the "mild inflation" claimed by the authorities.
Note: Latest data from Taiwan: The CPI year-on-year growth rate in December 2025 is 1.31%, and the annual average CPI is 1.66%. This is the first time in four years that it has fallen below the 2% inflation warning line, and it is also the lowest level in five years.
When "hallucination" meets "Taiwanese disease"
Wage growth in Taiwan is highly concentrated in the technology and semiconductor industries. Statistics show that approximately 70% of employed workers earn below-average wages. For those 70% of Taiwanese, their real wages may indeed be declining; this isn't an illusion, but rather because they are being "averaged out."
In November of last year, The Economist proposed the term "Taiwan Disease," which pointed out that Taiwan's export-oriented economy has long suffered from structural problems. The core issue is that the central bank has suppressed the exchange rate of the New Taiwan Dollar in order to maintain export competitiveness, resulting in a severe undervaluation of the currency. This has led to weak domestic demand, stagnant wages, soaring housing prices, and the inability of the public to share in the economic benefits, creating a contradictory phenomenon of "data prosperity but perceived stagnation."
To protect exports (especially in the technology sector), the central bank has maintained a relatively weak New Taiwan Dollar for a long time. This has resulted in imported goods (energy, raw materials, iPhones) being much more expensive for Taiwanese people.
Is the idea that "we can't afford it" a misconception for Taiwanese people? Now that Taiwan's GDP per capita has surpassed that of Japan and South Korea, and its average wealth is higher than that of France, do you feel it?
Is the inability to afford this article an illusion or a "Taiwanese disease"? The Economist reveals the truth about perceived poverty. This ABMedia first appeared on ABMedia .
