I’m seeing quite a few editorials, articles, and posts claiming that Americans are misinformed about the economy. I don’t believe that Americans are misinformed. I believe that economists are. Ordinary people being nervous about the economy is rooted in their day-to-day experiences.
The graphic at the top of the page (sampled from the WSJ) illustrates the change in grocery prices since 2019. In preemptive response to charges that the WSJ is a right-wing rag, today economist Greg Ip has an op-ed in the Wall Street Journal arguing exactly what I said above: Americans are misinformed about the economy. He dismisses new homebuyers faced with much higher mortgage payments as being a very small segment of the population.
He neglects to consider those with adjustable rate mortgages (ARMs), between 10% and 20%.
People with credit card debt aren’t a small percentage of the population. 82% of Americans have credit cards and of those almost half carry balances month-to-month. The interest rate you pay on your credit card debt is usually prime rate plus. Consider the change in the prime rate over the last few years:
Furthermore, 20% of Americans have home equity lines of credit (HELOC). The rate you pay on your HELOC is also usually prime rate plus.
If you make the reasonable assumption that there is not a perfect overlap between people carrying credit card balances and people with HELOC balances, that’s nearly 50% of the population who are paying considerably more for their credit (in one form or another) based lifestyle.
When you combine new homebuyers, people with ARMs, credit card debt, and HELOCs with the increased price of groceries, and rents, being nervous about the economy sounds pretty reasonable to me. Even more so the younger you are since younger people tend to run credit card balances and have HELOC debt.
No, you aren’t reading the articles correctly.
Everything about how hot the economy should be read with this article as the context The Jobs Numbers Aren’t Adding Up. Immigration Helps Explain Why.
The key part; “How is the country generating so many jobs even while the unemployment rate has drifted up?
The emerging consensus: a surge in immigration. It not only explains inconsistencies in the jobs data but suggests the economy can keep adding plenty of jobs without overheating….
…. the increase in the unemployment rate has been led by an increase in the unemployment rate among foreign-born workers. That is consistent with an influx of immigrants increasing the supply of workers looking for the types of jobs that new arrivals to the U.S. often fill”
Its a hot economy for people coming to the US looking for work.
If you aren’t in that group; the articles don’t really say how the economy is doing because no one is measuring that.
On a different subject I am reading about LOTS of layoffs in different segments of the economy and I’m not talking about Doordash drivers and fast food workers. Intel, Google, etc.
I don’t know how many of those are H-1Bs. That’s not the sort of thing that’s generally published.
It has been observed that a lot of the jobs that have been created are either low-end government jobs or low-end healthcare jobs.
Guys – US citizen total employment has not increased in years. It’s all immigrants.
Almost all the jobs are part time or government. Look at government spending. The cost per job is huge; a deadweight loss. A majority are part time.
Layoffs of real jobs, noted by Dave, are accelerating.
Inflation on real things, and including financing costs, as noted by Dave, are astronomical.
Noted Nobel economist, and partisan hack and liar, Steve, informs us that inflation is just something trumped up in media. In reality, it’s killing the Average Joe.
The Biden economy is a mess, reliant on the unemployment rate being low because job seekers are declining.
And the interest rate draw on the budget is just about at spiral out of control levels.
Media contributes to this by being propagandistic, fellating hacks for the Democrat Party. But pocket book issues are hard to hide.
Elites are fine. Middle and poorer America is getting hosed.
And now why you know why a miserable candidate like Trump can be doing so well.
I think married women with children will determine the next election, the people most likely to be buying a lot groceries. (There may be some stereotyping to this, but there isn’t polling specifically for people who buy groceries for more than themselves.) This group is also large and slightly skewed Republican. They might not like Trump’s character, but they also know prices are high.
P.D.
I’ve seen articles claiming Hispanics will turn the election, you say women with kids, I say it’s over already, the establishment has won. Trump has been cornered and harassed until he reacts like he is cornered and harassed.
The Democrats could run a pimple as their candidate and win in today’s environment.
I do the shopping in our house, and it is clear that there has been a major increase in inflation since the Covid nonsense. However, I think that the macroeconomic situation and wantonly irresponsible Congressional spending is the driver.
In FY 2023, the US spent $6.13 T, and had a deficit of $1.70 T. So far in 2024, we are running a cumulative deficit of $0.87 T, larger than defense spending. 28% of total US spending is financed by borrowing. Total national debt currently is $34.5 T, and the estimated 2024 GDP is $27.97 T. So debt is about 123% of GDP.
That’s peace time economics, but the Biden administration is pursuing aggressive policies that could lead to us being at war with Russia, Iran, and China. The cherry on the sundae is that US neocons and Israeli nutjobs want these wars.
Russia is only 50 miles from the US. How many members of Congress know that fact? If you strip out services and finance, and focus on things like electricity, steel, manufacturing, agriculture…, the combined Russian-Chinese economy is twice as big as the US’. Russia has as many engineers and scientists as we do, with only 40% of our population, and China has 10 times as many as we do., on 4 times our population. On a per caput basis, that works out to 2.5 times as many engineers and scientists as we have. That tells you all you need to know. Russia/China is an industrial economy, and we are not.
Industrial economies are high wage, high tax generating economies, and service economies are low wage, low tax generating economies. Toss in 3 to 4 million unskilled, uneducated immigrants per year, nearly all of whom will be state dependents, and you end up with declining wages and tax revenues.
Given our political leadership and culture, there is no way to turn this around. Inflation is merely wage reduction in disguise. Our working and middle classes are in a downward economic death spiral, and we are heading towards something like Mexico (if we are lucky) or South Africa (if we are lucky).
You read somewhere there are lots of layoffs and someone found 8 items with prices that grew faster than inflation. Im convinced.
https://fred.stlouisfed.org/series/CIVPART
Steve
The economy is in shambles. Bidenonics is not helping, but it is not the cause or a catalyst.
The US and some of the world economies were JIT with outsourcing anything possible. This created a very large supply loop, and with the COVID shutdowns, it has all collapsed. This loop took decades to create, and it will take years to restore.
The only quick answer is shrinkflation or crapification. Manufacturers need to stretch a smaller supply or use alternate supplies, and these alternate supplies will be worse quality.
Also, manufacturing tangible and intangible goods is not the same. Financial, service, and technological have an entirely different supply mechanism. As long as the tangible goods manufacturing chain is intact and functioning, the intangible goods manufacturing potential is enormous.
The economy is fluid, but economic theories are not. Hence, the impossible happens. Welcome to the new normal.
I made this point over at OTB, but I think most people look at their personal circumstances and personal circumstances are inputs to national statistical averages, not products of them.
Personally, I think all the talk about the “national” economy is mostly useless in political terms. The people who aren’t already in the tank for one side or the other aren’t reading blogs or looking at charts to get some kind of “objective” view of the US economy. They are busy with their own lives and looking at their own finances and budget.
From the swing state poll referenced in the WSJ piece:
On the question of whether their personal financial situation is going in the right or wrong direction:
Right direction: 46%
Wrong direction: 49%
Don’t know/didn’t answer: 6%
On the question of right/wrong direction of your investments/retirement savings:
Right direction: 41%
Wrong direction: 47%
DK/Refused: 11%
I don’t think it’s a coincidence that those pretty closely match the split between Trump and Biden right in the survey – 47 Trump, 44 Biden.
So while lots of people (74%!) think inflation is still going in the wrong direction, clearly, a significant chunk of them think they are doing better despite that and are still going to (at this point) vote for Biden.
My view is if the personal financial situation right direction numbers in the swing states improve to be positive over Trump by election day, Biden wins. If not, Trump wins. Here’s the thing—neither one has much control over what’s going to happen.
@Andy, I agree with most of your analysis, but there is a disconnect in what people mean by inflation. Inflation is the rate of increase of prices. A lot of people complaining about inflation are just complaining about high prices. I don’t know how many expected high prices to drop like gasoline prices eventually do, but it’s not entirely responsive to people’s complaint about high prices to tell them that they aren’t getting much higher, or the prices will just continue to increase at modest levels.
I was wondering if our resident basketball guru, as well as economic expert (triple snicker) was around.
Has Purdue folded yet? Or are you, as usual, moving goal posts to fit your chosen propaganda, er, narrative?
They played well. As the post game guys noted for the last 2 years they have been one of the two best teams in the country and they played like it this year. That said, I think they need a better game out of Smith if they want to beat UConn.
Interesting chart. If you adjust for demographics, meaning age, the LFPR is at (near) record levels.
https://twitter.com/ernietedeschi/status/1776232811076170154
Steve