(C) Daily Kos This story was originally published by Daily Kos and is unaltered. . . . . . . . . . . Not happy about the economy? There is good news, and better targets for anger about it. [1] ['This Content Is Not Subject To Review Daily Kos Staff Prior To Publication.'] Date: 2023-12-06 If you’ve seen the post by dmontaine, there’s a list of ways The economy sucks - for many of us. I won’t go into them all here — you can find the list at the link. There’s a lot there to be angry about — but there’s something to remember about much of it: it’s stuff that can be changed if we can keep the White House, take back the House, and keep the Senate. (The Supreme Court is still the joker in the deck, but more on that below.) The other thing to remember is that there are things about the economy that are not easy to change, at least not quickly or directly, but which still matter. And that’s where Paul Krugman comes in with his look at how things are going in a subscriber-only newsletter: Inflation, Disinflation and Vibeflation. For those who don’t have a NY Times subscription, Digby has picked up on it with “Immaculate Disinflation” Let’s deal in reality for a moment shall we? Over the past six months, the personal consumption expenditure deflator excluding food and energy — I know that’s a mouthful, but it’s the Federal Reserve’s preferred measure of underlying inflation — has risen at an annual rate of only 2.5 percent, down from 5.7 percent in March 2022. The Fed’s inflation target is 2 percent, so we’re not quite there yet. And you shouldn’t expect the Fed to declare victory any time soon. As I can tell you from personal experience, anyone suggesting that inflation is more or less under control can expect an avalanche of hate mail and hostile commentary on social media. In fact, I believe that the vehemence with which some Americans insist that inflation is still running wild distorts coverage in conventional media, too, because journalists are deterred from saying anything positive. And the Fed has to be especially careful, because it would lose credibility if inflation went back up after sounding too optimistic. The truth, however, is that inflation is looking very much like yesterday’s problem. But wait — don’t real people have to buy food and energy? Well, there are good reasons for policymakers to look at “core” measures excluding components that jump around a lot, but in case you’re interested, prices including food and energy have risen at an annual rate of … 2.5 percent, the same as core inflation. emphasis added Krugman has numbers and charts that show what’s been going on. It’s worth remembering that the Federal Reserve responded to rising inflation by raising interest rates. The idea was to bring prices down by forcing the economy to cool down to cut the demand that was raising prices. One consequence of this was expected to be rising unemployment, as companies cut their work forces as sales dropped off. Historically, that’s how inflation has been handled, and it was expected it would take months or longer to get through the pain. But that didn’t happen. What’s remarkable isn’t just the fact that we’ve made so much progress against inflation, but also the fact that this progress has seemed to come without any visible cost. So far, this has been “immaculate disinflation,” requiring neither a recession nor a large rise in unemployment. emphasis added Krugman gets into the way many economists were very pessimistic about bringing inflation under control without a lot of pain. For example, the American Rescue Plan, which rolled out a lot of government spending, was expected by many to be highly inflationary. Inflation did flare in 2021-2022 — but inflation flared around the world, not just in the U.S. which suggests that blaming it on the ARP was wrong. Instead, Krugman thinks the inflation was a response to the economic disruption caused by the pandemic working through the economy. (Krugman links to Claudia Sahm, who makes the case.) (You can also listen to Robert Reich on this, blaming rising inflation on corporate greed. No reason that can't be part of the story as well.) Digby quotes most of the newsletter from Krugman, but Krugman supplies some additional links, including the one from Sahm: Quick Hits Claudia Sahm on the vindication of the American Rescue Plan. White House economists on how supply chain issues — and their resolution — explain a lot of what we’ve gone through. Supply-side disinflation. Bad feelings about a good economy? Only in America. The last link is behind a paywall at the Financial Times, but it’s making an interesting point about economic gloom and doom. Here’s a few excerpts from John Burn-Murdoch: ...So what’s going on? Last weekend FocalData ran a poll for me, asking a representative sample of 2,000 US adults whether they thought economic circumstances had improved or deteriorated over recent years. The results were startling: Americans are consistently wrong in the negative direction on almost every measure we polled. By huge margins, they believe inflation is still rising (it’s falling), that it has outstripped wage growth (wages have outpaced prices), and that they have become less wealthy (they’ve become much wealthier). Attempts to justify this sense of gloom often emphasise the challenges faced by less prosperous groups, but this also goes counter to the evidence. One explanation I heard is that the despondency comes from young people struggling with runaway rents. But wages have risen faster for them than the old, outpacing rents. Plus young consumers are the most positive, per the Michigan survey. emphasis added His conclusion: It seems US consumer sentiment is becoming the latest victim of expressive responding, where people give incorrect answers to questions to signal wider tribal political or social affiliations. My advice: if you want to know what Americans really think of economic conditions, look at their spending patterns. Unlike cautious Europeans, US consumers are back on the pre-pandemic trendline and buying more stuff than ever. You can also attribute it, as Krugman does, to the constant flow of inflation doom stories in the media, because bad news draws eyeballs, and good news is not ‘news’. If you want to find things that are wrong with the economy, you can. Everyone has their own story about how the economy is working for them and not every story is a happy one. That being said, it’s worth looking at the broader picture. If inflation is coming down, if employment is at record levels, if the economy is growing (and consumer spending suggests it is), then we are in a lot better position to address those other problems. Meanwhile... The biggest danger to the economy is still Republicans gaining control of the government; everything they touch goes wrong. Let's not forget the illegitimate conservative majority on the Supreme Court they installed. They are hearing cases that could radically reshape America, by declaring government agencies do not have the authority to write and enforce regulations for example, or cripple the government’s power to tax. Conservatives have the court they have always wanted. They have a slew of cases working up through the lower courts and their partisan judges on their way to the Supreme Court where they will achieve by judicial fiat what they could not do at the ballot box. Remember who these people are working for — the 1% who can afford to take years working on this, funding those who will advance their agenda, creating think tanks and astro turf groups to spread their propaganda, financing politicians at all levels, and installing hand-picked activist judges to do their bidding. The people who invite Justices on all-expenses paid trips to Alaska, give them sweetheart deals on their homes, and give them expensive RVs can do it with what’s effectively chump change for them. Angry About the Economy? Consider This: If you want to be angry about the economy, Tom Sullivan over at Digby’s Place has something to ponder. We all hear about GDP — Gross Domestic Product in the news. It’s rising. What we don’t hear about is who benefits from that growth. Sullivan brings up another number we should be looking at: Gross Domestic Distribution, or to put it more simply — Follow The Money. Pay No Attention to Top 1% Behind the Curtain lays out just how little people know about how much inequality there is in America. This graphic shows it pretty plainly: actual versus imagined versus desired. Sullivan draws from Richard Parker at the American Prospect, on What We Don’t Measure — But Should. (The article can be accessed by registering for an account — no charge.) “Last year, America’s current-dollar GDP grew 6.6 percent to over $26,000,000,000—one quarter of the entire world’s total output, produced by just 6 percent of the world’s population,” explains Richard Parker. Yes, but who benefited? And so when the latest GDP number is announced, it’s front-page news in newspapers and magazines everywhere, a leading story for TV and radio, and the preoccupation of an almost uncountable number of online sites. But you may have noticed something strange about GDP: Because it’s a measure of the total economy’s output, it’s silent about how that output is divided among Americans. We’ve been living—and are living right now—in a nation with ever-increasing inequality, which makes the question of who gets how much of the GDP as important as GDP itself. And that makes it time for the government to start measuring and reporting more than GDP’s sum of our aggregate production. We need to know how GDP growth is distributed. Let’s for the moment call such a measure the GDD—for “gross domestic distribution.” (I’ll explain how it would work in a moment.) Most Americans already know that America has been growing ever more unequal—but beyond that, they know few details. Government tells them that GDP is still growing—by 5.2 percent in the last quarter—but not that nearly all of that growth is captured by the wealthiest 10 percent, and especially the top 1 percent. emphasis added The information is there — but it could be far easier to access if the Commerce Department’s Bureau of Economic Analysis put it together and published it along with GDP numbers. Imagine what the political debate would be like if people really knew where the gains from all their hard work was ending up. Imagine what policy discussions would be like if politicians were forced to acknowledge those for whom the economy works — and those for whom it does not. Maybe there’s a reason they don’t put this info out? (Another body of work details just how corrosive inequality is for every quality of life measure out there — but again it’s something that seems to be forbidden knowledge.) Sullivan concludes with this: A 2022 report by the nonprofit Washington Center for Equitable Growth recommended: The federal statistical system needs to be resourced to expand and continue reporting on inequality … Four decades of rising inequality calls for a more robust policy response to ensure broad-based growth in the U.S. economy. An important first step is to develop the data infrastructure to track growth in inequality over time, so that policymakers can monitor and respond to the problem, and voters can hold them accountable to producing strong growth for all U.S. households. I could say something similar about state election data. But now that’s 50 agencies and budgets. Imagine what happens to all the federal data with MAGA lackeys in charge. On that last point about MAGA lackeys, be very sure the threats and attacks on the media by them are meant to make sure we never hear about any of this. 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