Friday, February 23, 2024

The Real Scoop On and Around the Economy – Good and Bad

As a nation, how are we doing with jobs and money?  What I would call objective results say they are going well, but is there more than that?

Starting with “This Economy Has Bigger Problems Than ‘Bad Vibes” (Tressie McMillan Cottom, The New York Times, December 11th), there are doubts out there.  “The economy is growing.  Wages are up.  Unemployment is low.  Income inequality is narrowing.  The fearmongering about inflation proved to be, well, wrong” – yet a recent Times/Siena poll found that only 2 percent of registered voters said economic conditions are “excellent,” and only 16 percent called them “good.”  Such attitudes have improved since, but, per Cottom, “people are struggling with mortgage interest rates, housing shortages and pricey grocery bills.  They’re also consuming to make their lives work:  on expensive, hard-to-manage child care, health care and convenience spending – things like restaurants, travel, delivery services and on-demand help – which are necessary for balancing work and life demands.  Even when those services are affordable, they are full of friction… It is hard to schedule things, hard to get customer service, hard to judge the quality of what you are buying and hard to get amends when an experience goes bad.”  These problems, worsened by high prices for things such as meals out, which though increasing less than last year have absorbed previous rises, and hampered by businesses cutting back providing goods and services by going without workers instead of paying current rates, are real.  Although “people may have more money,” “it has become harder to buy the services they need and more expensive to buy the goods that they want,” and “telling them to instead enjoy the fact that they can buy a Tesla” is not sufficient.

So, with that, it might be more understandable that the “Majority of Americans feel US economy is in recession: survey” (Breck Dumas, Fox Business, December 12th), even though it is not.  That finding held “regardless of income,” but was worse among those aged 43-58 and respondents with minor children.  Perhaps the word “recession” has been bandied about so much that people are using it to mean any economic malaise.

Have U.S. residents’ feelings improved in the two-plus months since?  Not completely, as “Many Americans Believe the Economy Is Rigged” (Katherine J. Cramer and Jonathan D. Cohen, The New York Times, February 21st).  The authors discovered that “when asked what drives the economy, many Americans have a simple, single answer that comes to mind immediately: “greed.”  Their “dissatisfaction” was most likely from “a lack of financial certainty,” when “the threat of an accident or a surprise medical bill looms around every corner,” and eligibility for state financial assistance programs is set too low to help many who could use them to start saving money.

Paul Krugman described one related problem in “Watch What People Do, Not What They Say About the Economy” (The New York Times, December 11th).  Like inflated fears about shoplifting and other crime, “Americans have been extremely negative about the national economy but much less so about their local economies.”  Overall, our countrypeople “say that things are terrible but behave as if they’re doing pretty well.”

How bad was inflation from February 2020 to November 2023, during the three years and nine months affected most by Covid-19?  Per a detailed listing presented by Peter Coy, also in the Times on December 27th, the overall rate was 18.8%, with the highest gains heaviest in automobile-related goods and services, followed by meat and dairy items.  Clothing, travel-related services, fruits and vegetables, and medical-related products generally decreased or rose less than average.  Fuel oil went up the most, 54.8%, and televisions fell the greatest, 21.5%.  Some of these are consistent with the areas mentioned in the first article, but some are not, and others are not listed.

Two pieces took the positive view, one well defended by overall statistics.  Paul Krugman’s “Our Economy Isn’t ‘Goldilocks.’  It’s Better,” from February 1st in the New York Times, called it “both piping hot (in terms of growth and job creation) and refreshingly cool (in terms of inflation),” with wage gains supported by recently rising productivity, and a fourth-quarter 3.3% GDP gain far from recession territory.  Our “one-time burst of inflation” proved shorter-lasting than in similar countries, leaving us with “arguably the best economy we’ve had since the late 1990s.”

The second was “After 3 years of pain, America has finally achieved economic nirvana” (Neil Dutta, Business Insider, December 3rd).  The author mentioned that while we don’t know about decreases, it is hard to imagine interest rates going higher soon.  As well, we have become so accustomed to the number of net new nonfarm payroll positions far exceeding our population growth that most considered a month with 150,000 more “disappointing,” and unemployment, under 4% at article time, has stayed there.  Contrary to those constantly predicting an imminent recession, “the chances of a placid 2024 are becoming more real with every data release,” backed up by the two Employment Situation Summary emissions since, and “if 2023 was about the hard work of stabilizing the economy, then 2024 is about enjoying the fruits of that labor.” 

So where are we?  I can’t buy that the economy is bad, weak, or even indifferent – it’s booming.  Yet the Cottom piece points out too many related issues.  Now that we know that we’re not going back to 2010, 2020, or even 2022, we need to repair them.  That is up to more than our president – it can be accomplished by businesses, Congress, state legislatures, and even individual workers and families.  Let’s see what we can do.

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