The Great Resignation

The Daily Escape

Sunrise, Alpine AZ – November 2021 photo by Ed Kendall. Alpine is at 8,200’ elevation.

From Krugman:

“You’re probably aware that the US is experiencing what many call the Great Resignation — a significant fall in the number of people willing to accept jobs, at least at pre-Covid wages. Four million fewer Americans are employed than were on the eve of the pandemic, yet the rate at which workers are quitting their jobs — usually a good indicator of labor market tightness — has hit a record, and the scramble of employers to find workers has led to rapid wage increases.”

People see the “now hiring” signs everywhere. They assumed that generous unemployment benefits were discouraging workers from accepting jobs. But the enhanced benefits went away with no visible change in the US labor force participation. So, what’s going on?

Back to Krugman: (brackets by Wrongo)

“…[the] Great Resignation, it turns out, is largely an American phenomenon. European nations have been much more successful than we have at getting people back to work. In France, in particular, employment and labor force participation are now well above prepandemic levels.”

Barry Ritholtz says that there’s a massive transformation underway in America’s labor markets. When we look at the total Quits Rate for all Nonfarm payroll workers since the Great Financial Crisis (GFC) ended in 2009, the trend in the “quits rate” has steadily moved higher for all workers and really accelerated this year:

The red trend line shows that the rate that people are quitting has now returned to its level in 2016, and except during the pandemic, it has continued to rise.

If you look at only the Quits Rate for Professional & Business Services, those white-collar workers who did okay during the pandemic, their trend isn’t the same as the overall quits:

There’s been virtually no difference in the rate of professional quits since 2008. That’s telling us that the Great Resignation is taking place in the lower half of the employment wage scale, entry-level jobs, and the tiers just above them.

This has deep ramifications for the American economy.

Companies who rely on cheap labor are having hiring problems. Those companies that pay the minimum wage (or slightly higher) are having a hard time finding workers. Part of this is the failure of the Federal government to raise the minimum wage, which has been the same since 2009. That hasn’t kept up with inflation, or the growth in corporate profits.

Instead of gradually raising the minimum wage over time nationally, putting it on a path towards $15 or higher, we’ve allowed wage pressure to build for years. Then, during the pandemic, we experienced an 18 month period when low-wage workers reconsidered their careers. The dam broke, and we’re seeing both a sudden spike in wages and a shortage of workers.

Along the way, some labor has upskilled, gotten certified, degreed, and found new fields to work in. Now we have millions of people launching small businesses, striving to make it to the middle class, and towards self-determination. From the WSJ:

“The pandemic has unleashed a historic burst in entrepreneurship and self-employment. Hundreds of thousands of Americans are striking out on their own as consultants, retailers and small-business owners.”

The number of unincorporated self-employed workers has risen by 500,000 since the start of the pandemic, to 9.44 million. Except for a few months this summer, that’s the highest total since 2008. It amounts to an increase of 6% in the self-employed, while overall US employment total remains nearly 3% lower than before the pandemic.

So far this year, these entrepreneurs applied for federal tax-identification numbers to register 4.54 million new businesses, up 56% from the same period of 2019. That is the largest number on record since 2004. And two-thirds are for businesses that aren’t expected to hire employees.

More from the WSJ:

“This year, the share of US workers who work for a company with at least 1,000 employees has fallen for the first time since 2004….Meanwhile, the percentage of US workers who are self-employed has risen to the highest in 11 years. In October, they represented 5.9% of U.S. workers, versus 5.4% in February 2020.”

So, there’s a challenging future ahead for the small fraction of American workers who willingly struck out on their own. Couple that with the problem for those firms who pay near-minimum wages and who still treat employees like commodities.

Americans like to believe in “survival of the fittest” when it comes to business and the market. Well, if your company won’t look after its employees properly, its workers may desert it. The company may not survive.

There’s a huge difference between a spectator sport economy with a few winners and lots of losers, and an economy where everyone feels as if they belong and see a way to do better. In the US economy, where the same side always wins, it shouldn’t be a surprise when people decide to stop playing.

At least until they no longer have to work for a dick.

Facebooklinkedinrss

Monday Wake Up Call – November 29, 2021

The Daily Escape:

Dusk, San Miguel Peaks, Uncompahgre National Forest, CO – November 2021 photo by Tad Bowman

And we’re back from our gratitude-giving, dessert-eating weekend at the Mansion of Wrong. Did I miss anything? Oh yeah, Omicron. It’s the 15th letter of the Greek alphabet, but it has a darker meaning for people who fear Covid. Omicron is also known as B.1.1.529 Coronavirus variant. It was first detected in Botswana and South Africa earlier this month.

It’s moving fast. Cases have been found in Australia, Hong Kong, the UK, Germany, France, Italy, Belgium, Israel, and the Netherlands, in addition to several African countries. But we know very little about it so far.

Three questions have to be answered: How rapidly does the variant spread? Is it capable of causing more serious disease than the known variants? Can it circumvent the immune protection of the Covid vaccines?

Once again, we’re facing an unknown. Dr. Fauci said Omicron looks more transmissible than others, and thinks that it’s inevitable that the US will see cases of the new variant. No need to panic, but the US has shut down flights from several African countries. There are questions facing us:

  • Will we be better prepared for this variant than we were for the past several variants that have killed nearly 800,000 Americans?
  • If a new variant becomes widespread, will it help make a nation that is already skeptical about its institutions and leaders better able to take direction from the federal government?
  • Will a substantial minority again toss aside experts and incumbents in a pursuit of self-management of their disease in the name of toxic freedom?

What will the political and economic ramifications of a new surge of disease be as we enter an election year? The battle lines are drawn. We know that the country is very evenly divided, and trying to govern causes one side to demand nearly the opposite of whatever is proposed. People on both sides of the political divide ask: Who can we really trust? Who do we really believe can solve the problem? Who’s really for us?

We used to take it on faith that our country works, that the dollar is a valuable currency, that there will always be a peaceful transition of power. But those things are slipping away. Many think that we are teetering on the edge of something very dark, that we must be pulled back, if we are to preserve America.

What are we actually trying to preserve? Our lack of shared values? The sham of our voting laws? McDonald’s, apple pie and baseball? Think long and hard about these questions. Regardless of what conclusion you reach, you’ll find that it simply won’t resonate with a significant minority of Americans.

Time to wake up America! Our social cohesion is dying. The Fund for Peace ranked the political cohesion of countries between 2008 and 2018. They found that the US had the largest drop in cohesion of any country studied, including Libya, Mali, and Bahrain. Martin Longman likens an asteroid headed straight for Earth to where we are as a society. We complain about the asteroid rather than the destruction it will cause.

To help you wake up, listen to U2 play their global hit “One” live at Commonwealth Stadium, Edmonton, Canada in 1997. The song is about finding unity:

Sample Lyric:

Well, it’s too late tonight to drag the past out into the light.
We’re one, but we’re not the same.
We get to carry each other, carry each other… one
Have you come here for forgiveness,
Have you come to raise the dead
Have you come here to play Jesus to the lepers in your head
Did I ask too much, more than a lot
You gave me nothing, now it’s all I got.

One” is a song about disunity written against a backdrop of reunification. U2 decided to work at Hansa Studios in Berlin. The studio used to be called “Hansa by the Wall” but when U2 got there, the Berlin wall was gone. Bono told the BBC:

“The irony of One’s title is the band wasn’t very close at the time….We were building our own wall right down the middle of Hansa studios.”

More from Bono about One:

“The concept of oneness is of course an impossible ask….Maybe the song works because it doesn’t call for unity. It presents us as being bound to others whether we like it or not. ‘We get to carry each other’ – not ‘We’ve got to carry each other’.“

Facebooklinkedinrss

Happy Thanksgiving

The Daily Escape:

Turkeys on the fields of Wrong – November 2018 photo by Wrongo

(Wrongo is taking a break for the Thanksgiving holiday. Posting will resume on Monday, November 29th. We should expect that by then, most of what we already know will still be on everyone’s plates, and it won’t be leftover turkey.)

“I am grateful for what I am and have. My thanksgiving is perpetual”Thoreau

Thanksgiving is Wrongo’s favorite holiday because as a secular holiday, no one commands you to do anything. Celebration is subdued, and at least around here, it focuses on gratitude.

Here’s Wrongo’s thanks to the readers of the Wrongologist. Special thanks go to everyone who reads this crummy blog, particularly those who have stuck around since the beginning: Monty, Fred, David, Marguerite, Kelly, and Terry. Thanks to those who comment and send me private emails saying the equivalent of “What’s wrong with Wrongo?”.

I am grateful that you all stick with it, and with me.

We started this adventure in 2011. Since then, this is the 2,286th post. This year’s list of readers includes people in 166 countries. The company that hosts the Wrongologist says that in the past 12 months, we’ve had 1.2 million page views. Most readers (43.7%) use a desktop machine, and Chrome (48.2%) is the preferred browser.

Wrongo is grateful every day for this journey he’s on with you. Sometimes, it seems like cynicism and despair is all we have left. But then there are days like today, a crystal clear morning, and at sunup, the temperature outside was 26°F. Hopefully, optimism will stick with us for a few days.

On the big day, we’ll have a fire in the fireplace, “Alice’s Restaurant” playing in a semi-continuous loop, along with good thoughts about the great country that we’re privileged to live in.

We’re thankful to those who came before us, and to our family members and friends who can’t be with us today. We’re thankful to those who are on the front lines in military service, or here at home in our hospitals, schools, firehouses, and police stations.

Let’s listen again to two of Wrongo’s favorite Thanksgiving songs. First, the late Tom Petty and his band Mudcrutch. Petty started his career with Mudcrutch, but everyone knows The Heartbreakers, who he had most of his hits with. Petty returned to Mudcrutch for the last time in 2016, when they released the album “Mudcrutch 2”. Here is Mudcrutch with Petty singing “I Forgive it All”, an incredible reflection on life and forgiveness. The video stars Anthony Hopkins:

Sample lyric:

I ain’t broke and I ain’t hungry
but I’m close enough to care

Wrongo’s other favorite Thanksgiving song is “Be Thankful For What You’ve Got” by William DeVaughn. It sold nearly two million copies after its release in 1974. It reminds us of a time when there was more optimism in America. If you lived or worked in NYC in the1970s, the video will take you back to a difficult period in that city’s history:

Sample lyric:

Though you may not drive a great big Cadillac
Gangster whitewalls TV antenna in the back
You may not have a car at all
But just remember brothers and sisters
You can still stand tall
Just be thankful for what you’ve got

Happy Thanksgiving everyone!

Facebooklinkedinrss

Should Biden Run Again?

The Daily Escape:

Mesquite Dunes, Death Valley NP – November 2021 photo by Ed Kendall

Paul Campos asks: “Should Biden run again in 2024?” While Martin Longman asks what explains Joe Biden’s steep decline in the polls in the latter half of 2021?

Jonathan Chait has an idea:

“Nobody can say with any confidence if this fall can be reversed. Indeed, given the US’s steady job growth, nobody can ascertain exactly why the public has turned so sour so fast. Biden is like a patient wasting away from some undiagnosable disease. What is clear is that if the presidential election were held this fall, Biden would enter the contest as the decided underdog against Trump.”

All of us have been on the wrong side of failing someone’s unstated expectations. We didn’t know we were taking a test; we didn’t know our actions were being scored, and naturally, we failed. That’s where Biden is today. Regardless of the analysis, it seems clear that Biden would lose an election to a Republican if it were held today, probably even to Trump.

But the reasons for Biden’s poor poll numbers are at least to Wrongo, unclear. At the 2020 presidential election, people were crying out for a return to normalcy. Back to Campos:

“It’s clear that a big underlying reason for Biden’s success in 2020 was a widespread…belief/hope among voters…that electing an anodyne middle of the road elderly white man — you know, a normal person, as opposed to a woman or a minority or a Jewish radical leftist [sic] — would calm things down after all the Trump craziness, and the Republican party would at least trend back toward being a center right party…”

We didn’t return to normal, and maybe, there isn’t a normal to return to. If that’s true, “Make America Great Again” will again have tons of appeal.

Wrongo detects among Democrats a perception that Biden and the Democratic Party are all in on tying their policies to racial justice. While that’s well-intended, and good strategy for energizing the base of People Of Color, it’s causing some dissatisfaction among Whites and certain Hispanic sub-segments.

That showed in this year’s Virginia and New Jersey elections. White suburban women moved away from the Dems in both states.

In Passaic, NJ, Hispanics make up about 70% of the population. Trump won 22% of their vote in 2016, and 36% in 2020. The 2021 Republican candidate for governor won a similar percentage. A Republican won a seat on the county board of commissioners for the first time in more than a decade.

These results should be a wakeup call for Democrats.

A recent Pew Research study divided the electorate into nine affinity groups, four Republican, four Democratic and a disaffected group that didn’t fit well into either Party’s coalition. Pew found that among: (brackets by Wrongo)

“….the four Republican-oriented typology groups…[fewer]…than…a quarter say a lot more needs to be done to ensure equal rights for all Americans regardless of their racial or ethnic background; by comparison, no fewer than about three-quarters of any Democratic group say a lot more needs to be done to achieve this goal.”

This gulf on one of the central questions facing our nation suggests that for now at least, Republicans have a powerful message to take to Independents and undecideds in the mid-terms and beyond. From Tom Sullivan:

“The MAGA squad on Capitol Hill sees waging culture war as the very point of holding political office: stoking anger, provoking fights, “owning the libs,” and advancing conspiracy theories.”

Everything isn’t about Dems being too pro-equality. Things like the withdrawal from Afghanistan, inflation, the supply chain disruptions, and the Delta variant of Covid have something to do with Biden’s poor numbers, along with no prospect of returning to normal.

Should Biden not run in 2024? Do the Democrats have a viable national candidate who could step into Biden’s shoes? Having a president candidate in their early to mid-80s, like Biden will be, isn’t optimal. That would seem to rule out both Sanders and Warren.

Kamala Harris looks to be doomed at least for now as a national candidate. She polls behind Biden. About the only thing low-information voters know about her are her gender and ethnicity. All else being equal, being nonwhite and female are probably national electoral handicaps this time around. She does appeal to many minority voters. But are there enough minority voters in swing states who would be willing to vote for her?

Given the ossification of the Democrats, the question of “Who should run?” feels like shuffling the deck chairs on the Titanic.

We’re one election away from permanent Republican rule that will bring with them “show elections”. So far, no Democrat with the exception of a few dark horses, like Transportation Secretary Pete Buttigieg or Connecticut Senator Chris Murphy, appear to have the smarts and charisma to be credible with the disaffected middle road of American voters.

Maybe the Dems have no realistic alternative to Biden in 2024.

Who do you think should run?

Facebooklinkedinrss

Monday Wake Up Call – November 22, 2021

The Daily Escape:

Ash Meadows National Wildlife Refuge, NV – November 2021 photo by Marcia Steen

Today is the 58th anniversary of the assassination of President John Kennedy. While it wasn’t the first time Americans dove deep into conspiracy theories, who killed JFK has always been a controversial topic surrounded by conspiracy theories since that November day.

Over the weekend, we passed a sad milestone. The number of US Covid deaths in 2021 surpassed the deaths in 2020 and we still have a month to go. So far, there have been 385,457 deaths this year vs. 385,343 in 2020 according to the WSJ.

Wrongo has a few observations about what our continuing saga with Covid says about America. Almost 200 million of us are fully vaccinated. In addition, we have had 47 million confirmed cases to date. That means 74.8% of us have some level of antibodies to the several variants of Covid that have traveled through our population in the past two years.

But because: 1) Vaccines haven’t made it beyond the rich world (only 6% of the population in Africa is vaccinated) and 2) Americans seem to value the freedom to control their bodies over public health, new variants that may not be controllable by current vaccines could infiltrate the US.

There’s one very concerning new variant, B.1.640. It appears to be from Africa and has only been seen in small numbers. Apparently it’s bad. The Jerusalem Post mentioned it in” New COVID variant found in France: Reason for panic or not quite yet?” after it spread to Europe:

“A new COVID variant identified in a handful of European countries is raising concerns among some health professionals because there are changes to the coronavirus spike protein that have never been seen before.”

The B.1.640 variant has nothing to do with Delta. Researchers have had a really hard time placing it on the known Covid family tree, because it’s so far removed from anything else, that it just sits on a very long branch of its own. They think that it may elude our current vaccines.

If true, this would be another example of viral evolution completely blindsiding us. And if it isn’t this one, we’ll probably see some other variant.

The sad truth is that America is no longer willing to fight Covid. We think its too hard, and we don’t like doing difficult things. Too many of us don’t want to choose between public health and our economy.

Our unofficial policy is to expect that Covid will become a gradually declining annual infection. But that’s based on the assumption that we have a successful vaccine, that the current variant is all we’ll see, and that the virus will lose its potency over time.

Nobody dares say it out loud, but Covid has revealed the US to be a prime risk for a bioweapon attack.

If a terror group, or an adversary country decided to launch a biological attack, there is clearly nothing that we would do to stop it. How do we know that? Because Covid could have been a biological attack, and it was allowed to spread broadly instead of being properly dealt with. Because it was “too hard” to try to stop it.

We’ve spent countless $ trillions over the last 20 years for “national security”, and this is where we’ve gotten to? Wrongo is starting to think that Churchill’s comment that “the US will do the right thing, after we’ve tried everything else” was overly optimistic.

Time to wake up America! We’ve got to toughen up, or face defeat, not only on the battlefield but in ICUs across America. To help you wake up, here’s a throwback song from another era. Listen to “I’d Love to Change the World” by the late Alvin Lee & his group, Ten Years After from their 1971 Album: “A Space In Time.”

The video doesn’t feature the band, just the song from the album. The video is a film student project that Wrongo likes. Overall, the song  looks at what were considered the biggest problems in the world in 1971: Overpopulation, economic inequality, pollution, and war. Unsurprisingly, the issues remain the same:

Sample Lyric:

Everywhere is freaks and hairies
Dykes and fairies, tell me where is sanity
Tax the rich, feed the poor
Till there are no rich no more

I’d love to change the world
But I don’t know what to do
So I’ll leave it up to you

Facebooklinkedinrss

Sunday Cartoon Blogging – November 21, 2021

The Rittenhouse verdict is in. The jury has spoken, and in our system, regardless of who agrees or disagrees with it, it’s decided, and we move on.

Whether justice was done by a “not guilty on all counts” verdict is a question that can will never be fully answered, but he WAS found innocent, and there’s no appeal. That says more about us than it says about him. The problem isn’t our laws, either about gun ownership, or self-defense, although Wisconsin’s self-defense law could be better. Not so long ago, we had exactly the same laws and we lived in a (mostly) decent society that wasn’t armed to the teeth.

But we no longer live in that society now. We now live in an angry society where vigilantes are praised. The Republican Party has turned this little son of a bitch into a murderer and then, into their little pet hero.

Rittenhouse is a hero to the entire American Right Wing, which is represented politically by the Republican Party. Doubt that? Consider this tweet from Rep. Anthony Sabatini, Republican representing Florida’s 7th Congressional district:

On to cartoons. The Rittenhouse trial checked all  the boxes:

Wrongo heard a pundit on NPR say the Rittenhouse verdict was a win for Constitutional rights. Wrong! It had nothing to do with the Constitution:

Rep. Gosar’s murder tweet didn’t even register with the elephant:

The difference between the Parties:

Bannon plans to make his taking of the 5th Amendment a long slimy road:

2021’s Thanksgiving seating plan:

 

Facebooklinkedinrss

Saturday Soother – November 20, 2021

The Daily Escape:

Floyd Lamb Park, Las Vegas NY- November 2021 photo by Marcia Steen

The biggest, baddest news of the week was that Kyle Rittenhouse was found innocent on all charges in the Kenosha murders.

As bad as that is, there’s some good news to start the weekend. First, the House succeeded on Friday in their months-long quest to pass Biden’s social spending bill. It still faces a serious challenge in the Senate before it can become law.

Second, the Organization for Economic Co-operation and Development (OECD) reported that the US is the only G7 country to surpass its pre-pandemic economic growth. Employment is up. Wages are up. Goldman Sachs predicts by the end of next year the US unemployment rate will drop to a 50-year low, thanks to continuing red-hot demand for workers. Retail sales surged 1.7% in the month of October. American consumers spent $638 billion in October, a 16% increase from last year.

Meanwhile, slowly but surely, the supply chain bottlenecks that have plagued our economy for over a year appear to be easing. Imports through the ports of Los Angeles and Long Beach are up 16% from 2018, and in the first two weeks of November, those two ports cleared about a third of the containers sitting on their docks.

The Baltic Dry Index (BDI), a measure of global shipping rates and an inflation indicator, has plummeted 50% since peaking Oct. 7, another good sign for consumers. And the global chip shortage that was crippling the auto industry? GM said that the week of Nov. 1 was the first time since February that none of its North American assembly plants were offline due to a lack of chips.

All of this good news is going to waste because of the media’s hot takes on how bad Biden is doing. From Eric Boehlert:

“For weeks this fall, the Beltway press joined forces with the GOP to tell a hysterical tale about the state of the US economy. It was an alternate version of reality, where the stagnant, faltering economy was being driven to the precipice by runaway inflation, which stood poised to demolish middle-class savings across the board. All while an ineffective president stood by and watched cash-strapped households suffer.”

Boehlert says that recent press coverage suggests the economy is an albatross around Biden’s political neck, while in reality, it’s booming.

Biden got elected to bring a return to normalcy. Since there’s no normalcy in sight, his poll numbers (along with Democrats generally) have plummeted. David Brooks in the NYT addresses Joe Biden’s efforts at meeting the needs of people in “left behind” places of the country that did not vote for him: (parenthesis by Wrongo)

“If (noted economist) Larry Summers thinks lifting wages at the bottom will cause inflation…so be it. The trade-off is worth it to prevent a national rupture.”

Democrats have to get beyond the victory laps when they pass a bill, and let America know what the bills are for. Propaganda is a tool that shouldn’t be used to yammer on about defunding the police. Here’s Wrongo’s list of what Dems should say they’re for:

  • The Bill of Rights
  • One person, one vote
  • A world-class ideology-free education for all American kids
  • Jobs for more Americans
  • Universal health insurance
  • No more foreign interventions
  • More police funding and more police accountability
  • Reduce carbon emissions
  • Zero potholes

That last one is facetious, but it’s political gold in Wrongo’s town, and is funded in the recent infrastructure bill.

The Democrats’ gamble is whether their efforts and their successes will be rewarded politically less than a year from now, in November 2022. Remember that despite what the pundits say, passing the items on Biden’s platform shouldn’t be primarily to woo swing voters. They’re to shore up enthusiasm among your base, something that Dems didn’t have in the recent elections in Virginia and New Jersey.

Right now, things look grim. If you let your mind wander to what might happen if there’s a Republican House and Senate in January 2023, you should be happy not sad, that the Dems aren’t repealing the filibuster.

Let’s take a break and try for some normalcy in our weekend. Wrongo recommends that you start by not watching the Sunday pundit shows. Here on the fields of Wrong, we’re still engaging in our fall clean-up, trying to take advantage of the few warmer days to work outside. Also, there’s some menu planning for Thanksgiving underway.

So, settle into your Saturday Soother, where we leave the chaos behind for a few moments. Let’s start by grabbing a chair near a large window, and listening to the Prague Cello Quartet play an atmospheric version of the theme from “The Phantom of the Opera”:

Facebooklinkedinrss

Increased Demand is Causing Price Inflation

The Daily Escape:

Pueblo Bonito, Chaco Canyon, NM – November 2021 photo by James C. Wilson. It’s difficult to hire stone masons this good today.

 “If Americans are feeling glum, they sure are engaging in some retail therapy.”— WSJ’sHeard on the Street” columnist Justin Lahart

We’re in a period of unclear signals. Every poll says that Americans believe inflation is high and the economy is bad. But unemployment is low, GDP growth is high, and people are buying things like crazy:

“The Commerce Department…reported that sales at stores, restaurants and online rose 1.7% in October from a month earlier, better than the 1.5% economists expected. Additionally, estimates of August and September retail sales were revised upwards. Sales were broadly higher across most categories, with gains at department stores, electronics and appliance stores and online retailers in particular…”

This led economists to revise their fourth-quarter GDP estimates higher. JPMorgan Chase now forecasts GDP will grow at a 5% annual rate in the fourth quarter, versus its previous 4% estimate. The news wasn’t all terrific, as restaurant and bar sales were flat in October versus a month earlier. That might be an indication of cooler weather keeping diners at home as outdoor seating arrangements became less comfortable.

Overall, this dynamic growth in retail sales stands in contrast to the University of Michigan’s consumer sentiment survey that fell in early November to its lowest level in a decade.

How to explain what’s going on? People have some savings. Some people have higher wages, and both seem to be having a greater influence on how much people are willing to spend than price increases are having on how they feel about Biden’s job performance.

Claudia Sahm argues that some of the savings are due to government checks, and it was worth it:

“2021 began with economists arguing about $1,400 stimulus checks. Americans got them, but they got higher inflation too. Even so, the checks were very good policy.”

She compares the government’s reaction in the Covid crisis to their reaction during the Great Recession. This time, Congress went big:

“In 2008, Congress enacted one round of stimulus checks, totaling about $110 billion. During the first year of Covid, it sent out three rounds at close to $1 trillion dollars. A family of four got $11,400, which is about 20% of median family income.”

Here’s a chart showing the difference between the two policy approaches. Sahm plotted the value of the payments against the trend of personal income during both recessions:

The three rounds of stimulus checks provided relief to the families whose lives Covid disrupted and it helped bolster the economic recovery by creating jobs. The Covid relief paid the bills. Stimulus helped bring back paychecks.

Most people spend most of the money they make. With smaller take-home money during the crisis, many Americans made a dramatic cut in their spending. And big cutbacks in spending in an economy driven by consumers, led to big layoffs. So, the policy decision to put money in people’s bank accounts was key to keeping the Covid recession as short-lived as possible.

Clearly, the fast recovery came with a cost. Inflation is higher today than it has been in 31 years. But don’t let the inflation doom-sayers fool you: consumer spending, even after taking inflation into account, has been increasing even as millions are out of work.

New Deal Democrat shows us that total activity through the big Southern California ports is breaking records, and yet as we know, they still can’t keep up with the increased import demand:

Despite increased container handling capacity, this explains a great part of the current supply chain bottleneck since the global supply chain is incapable of handling a sudden jump in consumer demand. It partially explains why goods shortages and price pressures have mounted. That, in turn, is pushing up prices. The NYT quoted Aneta Markowska, chief financial economist for Jefferies, an investment bank:

“It’s the demand in the first place that’s causing prices to move higher…There is a supply shortage, but it’s not because of bottlenecks. It’s because we’ve had this big shock to aggregate demand and supply can’t respond quickly enough.”

There are still plenty of logistics bottlenecks. Yes, we’re buying much more stuff, and paying more for it. But households were sitting on a collective $2.5 trillion in savings built up during the pandemic. And millions of jobs have come back, so spend they will.

The Covid recession was a sharp and steep one, the deepest since the Great Depression. But the speed of recovery has been very fast, due in large part to the policy decision to put checks in people’s pockets.

This time, government worked for us.

Let’s have a Thursday tune. Everyone has heard 1981’s “Under Pressure” a masterpiece by Queen and David Bowie. It was covered by Fall Out Boy as part of ABC’s Queen Family Singalong on Nov 4. Lead vocalist Patrick Stump tries to sound like both Freddie Mercury and Bowie. Read the words and you’ll understand why Wrongo offers it today:

Facebooklinkedinrss

Can Biden Whip Inflation?

The Daily Escape:

Lone Rock, Lake Powell – November 11, 2021 photo by Ron Broad. This shows how dramatic the loss of water has been in the lake. One commenter said it was possible to boat completely around the Rock in July 2021!

The country is facing a series of problems that, if unresolved, point towards a bloodbath for Democrats in the 2022 mid-term election. An ABC poll, released this weekend should be a wake-up call. Here’s a chart showing early mid-term voting preferences by Party:

On a generic ballot, it shows that the Democrats and Republicans have swapped places since 2017. Today the Dems are supported by just 41% of those surveyed, down from 51% in 2017.

It’s true that relying on polls conducted of just 882 registered voters via landlines, as this poll was, isn’t the only thing Democrats should build their political strategy on. But ABC’s result is similar to others.

People are frustrated with the economy, because they see how everything is getting much more expensive, and they’re blaming the government and politicians. They’re not blaming the Federal Reserve’s expansive policies, because the polls never ask about the Fed, and because most people don’t understand how it works.

Consider this: 62% said the Democrats were out of touch with the concerns of most Americans. One dimly positive note was that Americans didn’t rate Republicans much better, with 58% considering them out of touch. The economy was among the key factors: 70% said the economy is in bad shape, up from 58% in the spring. About half blamed Biden for inflation. And his approval rating of handling the economy plunged to 39%, with 55% disapproving.

Biden doesn’t control prices, but try telling that to consumers. People who make a living by selling their labor have seen recent wage increases get eaten up by higher rents, home prices, food prices, gasoline prices and higher new and used-vehicle prices.

But you can always find an economist or a political writer who minimizes an impending political problem. That’s the kind of thing that Wrongo said yesterday was a bad strategy for Democrats. Here’s Dean Baker: (emphasis by Wrongo)

“The October Consumer Price Index data has gotten the inflation hawks into a frenzy. And, there is no doubt it is bad news. The overall index was up 0.9% in the month, while the core index, which excludes food and energy, rose by 0.6%. Over the last year, they are up 6.2% and 4.6%, respectively. This eats into purchasing power, leaving people able to buy less with their paychecks or Social Security benefits….While the stretch of high inflation has gone on much longer than many of us anticipated, there are still good reasons for thinking that inflation will slow sharply in the months ahead.”

Needless to say, if inflation continues at rates not seen since the 1970s until the 2022 election, no voter will see it as transitory and that won’t be good for Democrats.

Biden has signed his $1 trillion infrastructure bill, hoping that the legislation will help jump-start a Democratic political recovery. His infrastructure plan may not add to inflation, but inflation in the most important things that consumers either notice and care about – food, gasoline,  cars, and houses – doesn’t seem transient.

Biden has a few tools at his disposal. He’s doing what he should to address the microeconomic aspects of inflation: trying to increase capacity at ports, expanding microchip production and he’s considering a release of raw materials from the National Defense Stockpile. The biggest lever he hasn’t pulled is a tariff reduction, especially on goods from China.

Richard Nixon instituted price controls in 1971, They were the first and only peacetime wage and price controls in US history. After a 90-day freeze, increases would have to be approved by a “Pay Board” and a “Price Commission,” with an eye towards lifting controls, conveniently for Tricky Dick, after the 1972 election. His action led to greater inflation, not something any of us should want to see.

From Jason Furman in the WSJ:

“Ultimately inflation is a macroeconomic problem. It’s the Fed’s job to keep it under control….Policy makers at the Fed need to recognize that tools like asset purchases can’t solve the supply-side problems constraining US labor markets and output. They have a dual mandate. They have to take inflation into account even if the economy isn’t yet at maximum employment.”

Biden can pick a different Fed Chair, and there’s an additional vacant seat on the Fed’s board.

Biden can also be jawboning America’s CEOs about gas and food prices. Otherwise, he has no cards to play. All he can do is wait for supply and demand to turn back toward equilibrium, and hope that it happens in the next six months. If inflation turns around, Biden will get some credit.

If it doesn’t, you could see President Trump waddle back into the White House in 2024.

Facebooklinkedinrss

Monday Wake Up Call – November 15, 2021

The Daily Escape:

Autumn, Seven Lakes Basin, OR – October 2021 photo by Valledweller33

With Congress’s dancing around (and not passing) Biden’s social welfare bill, we’re now to the point where there are less than 20 days until the government’s funding runs out in early December. There are other issues that must be dealt with as well. The federal debt limit needs to be raised. The National Defense Authorization Act must be passed.

The Democrats and Biden are entering yet another critical time. Wrongo wrote about this two months ago, and since then, just about the only thing that Congress accomplished was passing the infrastructure bill. That wasn’t chump change, but the 2021 legislative calendar has only three weeks left to accomplish a long list of must-pass items.

But this is far from the only concern for Dems. With the 2022 mid-terms looming, they need to take a careful look at their policies on immigration, crime, and inflation. These will all be issues that Republicans use against them at election time. The Dems response is usually to deny that an issue is a problem for them, or for the country.

The Dems start by saying there’s nothing to the problem. They reframe it as a different and more complex issue, and say that the White House is already on top of it. This is what Ruy Texeira calls the Fox News Fallacy.

“This is the idea that if Fox News…criticizes the Democrats for X then there must be absolutely nothing to X and the job of Democrats is to assert that loudly and often. The problem is that an issue is not necessarily completely invalid just because Fox News mentions it. That depends on the issue.”

If there’s something to the issue and persuadable voters have real concerns, Democrats won’t assuage those concerns simply by embracing their Fox News Fallacy of denial and deflection. Texeira offers a few examples including the debate over CRT, border security, and crime:

“Start with crime. Initially dismissed as simply an artifact of the Covid shutdown that was being vastly exaggerated by Fox News and the like for their nefarious purposes, it is now apparent that the spike in violent crime is quite real and that voters are very, very concerned about it.”

Clearly this includes the Democrats’ traditional base of Black and Hispanic voters. A Pew poll found that Black and Hispanic Democrats are significantly more likely than white Democrats to favor more local police funding.

This is more of the disconnect that Wrongo wrote about last week. Democrats need to deal with how their pet issues may play differently to different parts of their coalition. As blog reader D. Price said in comments, we assume that our liberal values and the language we use to frame those values must fall on others’ ears just like it does on ours. He points out that Dems need to listen more and take seriously the different perspectives in the Democratic coalition.

Some Democrats, like NYCs mayor-elect Eric Adams, openly highlight their commitment to cracking down on crime and criminals. Consider a recent NBC poll that shows Republicans are favored over Democrats on the crime issue by 22 points.

And in heavily Black Detroit, a USA Today/Suffolk University//Detroit Free Press poll found that Detroit residents, by an overwhelming 9-1, say they would feel safer with more cops on the street, not fewer. On a list of eight concerns, police reform ranked last, at 4%.

The poll also found a significant racial divide on the question. Black residents ranked crime at the top of their list of concerns: 24% cited public safety, and just 3% named police reform, while White residents were only slightly more concerned about police reform than public safety, 12% compared with 10%.

Democrats have to stop saying that they suck at messaging, as if there’s nothing that can be done about it. They must create messaging that emphasizes what Americans have in common and their right not just to economic prosperity but to public safety, secure borders and a world-class (and maybe) non-ideological education for their children.

That’s much more likely to work than simply denying that these issues are problems.

Time to wake up Democrats! There’s no time to lose. Despite the messaging from DC that all will be fine in the mid-terms if the Dems just pass a few pieces of legislation, their problems are much deeper. To help them wake up, listen and watch Della Mae, an all-woman American bluegrass band perform their 2021 tune, “The Way It Was Before“.

Sample lyric:

I left my home and rolled the dice
Followed the promise of a better life
Now I work at the factory
On the third shift while my kids sleep
They say our job’s a necessity they turn the lock and hide the keys
They call us heroes on the killing floor but a day off is something that I can’t afford


We can’t go back to the way it was before
While some profit off the ones who just endure
We all know what’s broken won’t get fixed by wishin and hopin
We can’t just go back to the way it was before

Facebooklinkedinrss