Introducing "Vol-la-la"!
Welcome to the life of the party
Volala is a space for writing about how we navigate uncertainty. The good, the bad, and the shifty.
Let’s talk about economic unpredictability. Some of you know that my partner and I gut-renovated a house a few years back. For those who like to know actual costs, the interest rate on the construction loan I used to pay for that project was less than 2%, which amounted to a monthly payment of roughly $1100 back in 2014-2016. While this is a stretch for many Americans today, I could afford it on my salary at Treasury. Today, someone with similar finances to mine looking to tackle a similar project would pay an 8x higher rate[1] on a 30% higher purchase price[2], laying out 5x the monthly payment I paid overall. That’s a 400% increase in cost.
We talk a lot about inflation. The official numbers this morning put consumer price inflation at 3% per year[3] as of June 2024, and over the period from 2014-2024, which comes to a total price increase of about 30% over the past 9 years. But there’s more to that story than the official figures capture. The outlay to finance a dream home project like mine hasn’t grown 3% per year, it’s grown 20% per year since 2014.[4]
That’s close to the cumulative inflation rate in Iran, the country my parents immigrated from in the 1970s, which experienced 18-20% annual inflation over 2014-2024.[5] While 3% CPI inflation captures how much a fixed basket of common things people pay for has seen its price grow per year since 2014, there are parts of our lives where the steep price increases we’re facing are akin to the kind of hyperprice growth we associate with countries facing high sanctions and tremendous economic pressure.
Most of you, like me, have thought about what these changes mean for personal decisions – whether or how soon you’ll be able to afford a move across country, start a new business, tackle a home purchase, make a new addition to the family that might require more space or require a spouse to leave their job, or perhaps a job pivot that might come with a move. Having moved four times this past year myself, on account of mudslides, job changes, and helping my partner purchase a loft where we’re now based in LA, I understand the tradeoffs well. (And it’s likely I’ll tackle them in more detail in future posts, so if there’s an angle to homebuying, construction, commercial real estate or their risks that’s of interest, make a note please!)
But it’s not just individuals and households who contend with these epic shifts in what’s possible on their quests towards pursuing their dreams. There are similar patterns of change and adaptation in the business world, from the financial sector to climate investments to other corporations.
My former colleague, Swati, who runs incite.org writes about how the pipeline for investment in innovative climate projects in their middle-stage of growth has dwindled because of high interest rates. It’s not that higher interest rates made projects like fusion[6] intrinsically less possible or worthwhile. Rather, the opportunities investors and investors’ investors face have shifted. The old pipelines for financing these projects, the family funds, pension funds and institutional investors for whom certain risky projects used to be a no-brainer are now re-evaluating which kinds of risky projects have the highest payouts. (We’ll need to talk more about how the end of a decade-and-a-half of low interest rates is affecting the innovation landscape in a future post. If it’s of interest to you, let me know.)
I’ve caught up with at least 10 people in the past few weeks who are struggling with the ennui of working in the tech sector and reflecting that it no longer feels fulfilling. “One-third of U.S. employees say they’re engaged in their jobs—near an all-time low, according to Gallup’s annual report on the state of the workforce,” reports Callum Borchers in the Wall Street Journal. Particularly outside of AI, but even within it, many corporations are waiting for the fog of uncertainty around inflation and interest rates to lift before selecting projects to bet on. In the meantime, CFOs are laser-focused on cutting costs to extend company runways and valuations during this waiting game. The shifts that the finance sector and family offices are feeling play into hiring, career outlooks and that ennui across much of the economy.
As someone who is embarking on building a new business amidst all these changes (more on this to come!), I’m navigating this evolving business landscape together with everyone else.
Just over a year ago, I left Transfix, a billion-dollar supply chain startup that has been digitizing logistics since 2013. Recently, Transfix announced the acquisition of its brokerage by a legacy company that has been navigating the ebbs and flows of the industry for 92 years. This move highlights a profound lesson: whether it’s renovating a home or scaling a business, the ability to anticipate and navigate times of uncertainty can determine the quality of our lives and those of the teams, organizations, and families we lead.
Which of us feels like we can make a home in these uncertain times? Who knows how to throw a party in the midst of uncertainty? And is it the kind of party that feels like a sugar-high on the eve of the 1929 stock market crash that we wish someone else would foot the bill for, or one that taps into the lasting power of community and resilience, like jazz and swing, which have endured for a century? A few readers here will remember the house parties I used to throw in DC – speakeasy-themed gatherings that sometimes featured jazz bands and bathtubs filled to the brim with ice and always left me surrounded by friends who made me feel loved and supported.
I’m hoping to build a home here at Volala — one with room for my friends within and outside the financial sector, those who need to carve out space where their kids can play, those who need extra garage space for building businesses and passion projects, an outdoor grill for conversations weighing policy and strategy decisions, those who are novices to economics, those who’ve published across journals and driven policy discussions, and everyone in between. We’ll explore how volatility — and our own volition — shape our decisions, drive our adaptations and innovations, and ultimately craft our lives.
So, what do you want to hear about? What music have you been listening to? How have you been navigating these changing seasons of economic uncertainty? Tell me what financial life decisions or technical aspects of financial plumbing you’re trying to wrap your head around. How do interest rates impact your dreams at work and home this year? Full disclosure: I’m doing user research. And I’ll do my best to help connect you with the answers and understanding you’re looking for. Together, we’ll build our own party playlist.
Welcome to Vol-la-la!
[1] 15% construction loan interest rates are not uncommon in 2024.
[2] Comparable prices for the home I purchased have risen about 30% between 2014 and 2024, which is much below the 80%+ national average house price growth over this period of time. This is in part because it needed a lot of work and in part because house price increases in DC are much below the average. These differences across cities and regions are driven by interesting economic factors we can get into in a separate post.
[3] 3.0% is the rate at which a fixed basket of household goods and services has seen its price increase in the US on average over the past 12 months ending June, based on the consumer price index (CPI) published by the Bureau of Labor and Statistics.
[4] A 20% price increase each year means prices are 1.2 times what they were last year. Multiply 1.2X by itself 9 times (compounding over 9 years) and you end up with 5X prices. That’s also the same as 400% higher + 100% original value.
[5] This isn’t to say that construction costs rose 20% annually or 400% in total over 2014-2024 in Iran. Inflation refers to how much a fixed basket of household goods on average saw price increases.
[6] Fusion projects are one example of clean climate tech. They are focused on the science and safety of replicating the sun's energy-producing process on earth, capturing and bringing that energy to the electrical grid. They are expensive, challenging, high-risk, high-reward investments.