Category: Employment

Monday Wake Up Call, Recession Edition – August 1, 2022

The Daily Escape:

Monopoly, Revere Beach, MA – From the 2022 Revere Beach International Sand Sculpting Festival. July 24, 2022 photo by Jack Daryl Photography.

From Paul Krugman:

“The US economy is not currently in a recession. No, two quarters of negative growth aren’t, whatever you may have heard, the “official” or “technical” definition of a recession; that determination is made by a committee that has always relied on several indicators, especially job growth.”

Nonetheless, Wrongo predicts that over the next few months, the Big Brain News Pundits will spend mucho time arguing among themselves while we watch, about the meaning of the word “recession“. They will ensure that the word “recession” is said at least once every 30 seconds.

Wrongo brought this up a few weeks ago. Recessions are determined not by pundits but by a committee of economists at the National Bureau of Economics (NBER). The two measures that have had the most weight are real personal income and non-farm payroll employment. So, despite what you’re hearing, it boils down to income and employment. If income and employment turn south, there’s a good chance economic output will be lower. From Robert J. Shapiro:

“Start with employment, which normally contracts in the first two quarters of recessions. Over the first six months of the 1990–91 recession, employment fell by 690,000, or 0.6%. Similarly, over the first two quarters of the recessions of 2001 and 2007–09, employment fell respectively by 761,000 and 426,000 positions, or 0.6% and 0.3%.”

But in the first two quarters of 2022, employment actually grew, increasing by 2,740,000, or 1.8%.

The main factor behind the lower GDP in the second quarter was business inventories. Businesses generally finance increases in their inventories. So as interest rates rose in the second quarter, inventory purchases fell sharply, subtracting 2% from GDP. GDP growth in the second quarter was -0.9%, so inventories accounted for all of the loss of GDP.

Inventories grew. but at a slower pace, bringing about the negative GDP performance. But this change in the rate of growth in inventories is not tied to either employment or to income, so we’re not in a recession, even though GDP fell.

But our bigger economic problem is inflation. Back to Krugman:

“Obviously gasoline prices are down — almost 80 cents a gallon from their mid-June peak. (Remember those scare stories about $6 a gallon by August?)”

We all know that the Big Brain Pundits only really care about how much it costs to fill their gas tanks compared to what it may have cost when some other guy was president. Expect that they will ignore our record low unemployment, and the growth in median wages.

Despite growing slower than inflation, wages are growing at about 5.4% annually. That’s good, although it could be better. Yet, the Big Brains want us all to be worried about the possibility of recession and inflation occurring at the same time. They’re worrying about that old 1970’s bugaboo, stagflation, which is highly unlikely to occur, despite how much Republicans are rooting for it to happen.

If America really wants to stop inflation in its tracks, we know how to nudge prices in the right direction: Implement a windfall profits tax on oil and food companies, whose profits are off the charts, along with their prices. Also, we could pass the corporate minimum income tax that is a part of the proposed Inflation Reduction Act.

How well the Federal Reserve addresses inflation will decide how soon the current economic expansion ends, and a recession begins. Although the economy’s fundamentals are sound, there’s a danger that the Fed’s interest rate hikes may dampen demand and employment too much. That’s a 50/50 call right now.

Time to wake up America! We’re not in a recession, although we may see one in 2023. We don’t have inflation under control yet, although that’s likely to happen within the next year.

To help you wake up, watch and listen to Sir Elton John from his “Farewell Yellow Brick Road” tour. Wrongo and Ms. Right got to see him in Foxborough, MA last Wednesday, courtesy of daughter Kelly and her partner Bob.

It was Wrongo’s second time seeing Sir Elton, the first was at the Budokan in Tokyo in 1974.

Last Wednesday was a great night with an adoring audience for what seems to be near the end of his touring career. Here’s his final encore from last week’s performance, “Goodbye Yellow Brick Road” performed on the night we were there:

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Monday Wake Up Call – July 11, 2022

The Daily Escape:

Penstemon and Paintbrush, with Mt. St. Helens in background – June 2022 photo by Edwin Buske Photography

There are two big economic issues that the media and pundits say will influence the 2022 mid-terms: inflation, and the possibility of a recession.

Let’s start with the scare of a looming recession. Most Americans have been told that a recession occurs when real GDP contracts for two consecutive quarters. Sounds easy to figure out, but this definition wasn’t met in two out of the last three recessions. Some facts: The 2020 downturn lasted just two months, not two quarters. And during the 2001 recession, real GDP didn’t contract for two quarters in a row either.

The difference is that recessions are determined not by pundits but by a group of economists at the National Bureau of Economics (NBER), and they use several measures beyond GDP to make it official. Here’s how they explain it:

“A recession is a significant decline in economic activity spread across the economy, normally visible in production, employment, and other indicators…”

They go on to say that:

“There is no fixed rule about what measures contribute information to the process or how they are weighted in our decisions.”

In recent decades, the two measures that have had the most weight are real personal income and non-farm payroll employment. So, despite what you’re hearing from pundits about GDP, it basically boils down to income and employment. If income and employment turn south, there’s a good chance economic output will be lower.

But after two quarters of 2022, while output is slowing, income and the labor market are both still solid. The WSJ quotes Robert Gordon a Northwestern University economics professor and member of the NBER’s committee that decides on recessions:

“We are going to have a very unusual conflict between the employment numbers and the output numbers for a while…”

The US economy added 1.6 million jobs in the first quarter, and another 1.1 million jobs in the second quarter. Those numbers certainly don’t look recessionary, despite what the media is trying to tell us. U6, which is a measure of underemployment declined -0.4% to 6.7%. This is a new all-time low for U6, which has been tracked since 1994.

It may seem like splitting hairs to talk about the definition of a recession. But we need to be prepared for the coming political scenario where some argue we’re in a recession while others will refute that idea vigorously.

In this mid-term season, things are going to get weird.

Let’s turn to the scourge of inflation. It is among the first stories on the local news every night, but you might not know that as Paul Krugman says:

“The wholesale price of gasoline has fallen about 80 cents a gallon since its peak a month ago. Only a little of this plunge has been passed on to consumers so far, but over the weeks ahead we’re likely to see a broad decline in prices at the pump….what are the odds that falling gas prices will get even a small fraction of the media coverage devoted to rising prices?”

That seems to point to profit taking by the petroleum corporate interests. Have you noticed how much profit they have made lately? ExxonMobil plans to buy back $30 billion of stock this year with the extra money that we all paid at the pump.

Last Friday, PBS talked about a looming wage-price spiral, a neoliberal concept that says rising wages drive prices. But the annualized rate of wage growth, comparing the last three months (April, May, June) with the prior three months (January, February, March), was 4.3%,down from a previous annualized rate of 6.1%.

This is big since the Fed’s plans for aggressive interest rate hikes is based on its concern about a 1970s-type wage-price spiral. It is impossible to have a wage-price spiral when wage growth is slowing. The current 4.3%  wage growth is less than one percent higher than the 3.4% rate in 2019 when inflation was comfortably below the Fed’s 2.0% target.

Retailers are now stuffed to the gills with merchandise. What happened was that all of the product that was stranded at sea has finally reached store shelves. They will hold massive sales this fall to get rid of it, and that will lower prices.

The lockdowns in China are mostly over, last year’s fiscal stimulus has worked its way through the economy, and the Fed has begun sharply raising interest rates.

Krugman feels that as the economy weakens, the prospect for sustained inflation is receding.

Time to wake up America, don’t get demagogued by the scary economic terms that the politicians will throw at you. To help you wake up, let’s listen to Barenaked Ladies – “If I Had a Million Dollars” Live in Michigan in 2007:

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The US Jobs Market and The EU vs. Russia

The Daily Escape:

Sunset, Lake Sammamish, Issaquah, WA – June 2022 photo by Gary Hamburgh

Two pieces of news to think about today.

First, you can always tell when an economic boom is nearing its end, because the jobs market begins to get shaky. That seems to be starting. The WSJ reports that:

“Businesses in several different industries are rescinding job offers they made just a few months ago, in a sign the tightest labor market in decades may be showing cracks.”

No need to panic just yet, the labor market remains strong, with an unemployment rate at 3.6%, near a half-century low. But signs of retrenchment in hiring shows that executives are having trouble predicting the economy over the next 12 months.

And when companies revoke job offers, it indicates their view of the future business outlook has changed so quickly that it’s undoing hiring plans made only a few weeks before.

Many hiring managers say signing up new recruits remains highly competitive. The WSJ reports on a Gartner survey of more than 350 HR executives conducted in May that found around 50% thought the competition for talent would increase over the next six months. Nearly two-thirds said they hadn’t made any changes to their hiring practices or HR budgets in response to economic volatility.

But it seems there are changes afoot. Country wisdom says that a storm rarely hits us without warning. The skies turn dark, the wind picks up, the birds go quiet. It’s possible to see the signs before the storm hits if you know what to look for. We’re seeing signs now of what’s to come.

Second, there’s an adage, attributed to Trotsky, but difficult to verify, that says: “You may not be interested in war, but war is interested in you.” Those words are apt in today’s situation between Europe and Russia. CNN is reporting about an emerging flashpoint between Russia and the EU:

“Tensions are mounting around…the Russian exclave of Kaliningrad, an isolated but strategically significant territory on the Baltic coast…Russia has reacted furiously after Lithuania banned the passage of sanctioned goods…into Kaliningrad. But Lithuania says it is merely upholding European Union sanctions, and the European bloc has backed it.”

Kaliningrad is Russia’s westernmost territory and it has no land connection to Russia. It’s the only part of Russia that is completely surrounded by EU states. Here’s a map:

Estonia, Latvia, Lithuania, and Poland are all members of NATO, surrounding Kaliningrad militarily. Since Russia invaded Ukraine, experts have feared that Kaliningrad might become the next flashpoint in tensions between Moscow and Europe.

Russia says that Lithuania’s sanctions on goods transit is a blockade in violation of a 2002 agreement to allow goods to flow between Kaliningrad and Russia. Sanctions apply to about 50% of Russian shipments. The sanctioned products include construction machinery, machine tools and other industrial equipment. But food and personal travel are not sanctioned.

Since the Baltic freezes during the winter, resupplying Kaliningrad will become particularly difficult in about six months. Lithuania has also closed its airspace to Russia. A Berlin-style airlift could prove problematic as well.

Lithuania has spent years building a liquid natural gas (LNG) port and the infrastructure necessary to connect to Nordic and EU grids. She was therefore able to shut off Russian oil, gas, and coal quickly and is in a better position to do without Russia’s gas than the rest of the EU.

Lithuania imports 70% of its electricity from Sweden through a dedicated underwater cable. Sweden’s power is nuclear and hydroelectric, thus independent of Russia as well. Lithuania is also in a position to supply gas to Latvia, Estonia, and Poland through their LNG terminal.

So is Europe at a flashpoint? There’s little Moscow can do to Lithuania beyond threaten.

Is it just a matter of time before NATO and Russia are in a shooting war? Doubtful. Russia could try cutting off all oil, gas, and coal exports to the other NATO countries. Russia could then say they would sell to any countries that left NATO. That might not pop NATO’s balloon, but it might take some of the air out of it.

If Russia decided to do that, it would have to find a way to transport it’s oil, gas, and coal to alternate customers. That can’t happen quickly. Given that the adversarial relationship between Europe and Russia may last a decade or more, Russia will probably have to find alternative customers regardless.

Neither side wants to undertake drastic changes in energy supply too precipitously.

Wrongo doubts the Kaliningrad situation will lead to war, but each provocation and escalation increases the odds. We’re playing in a very high stakes game, given the nuclear weapons on all sides. But Europe and NATO can’t automatically bow to Russia’s threats.

NATO can’t be unwilling to fight, but there’s a difference between that and provoking a war. Right now, it’s difficult to see a peaceful end game between the US, NATO, and Russia

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Sunday Cartoon Blogging – April 3, 2022

The latest monthly jobs report shows 431,000 jobs were added. The report marked the 11th straight month of job gains above 400,000, the longest such stretch of growth in records dating back to 1939. So far in 2022, the economy has created 1.69 million jobs. That’s in just three months. By any fair measure, it’s an extraordinary total.

We are still about 1.6 million jobs below the number of employees in the workforce in February 2020 just before the pandemic hit. At the current average rate for the past six months, it will take three more months to get back to that level.

Leisure and hospitality jobs, which were the hardest-hit during the pandemic, rose by 112,000, but are still 1.5 million below their pre-pandemic peak. They comprise most of the jobs that are still missing in the economy.

Wage growth, which averaged 5.9% in the 2nd half of 2021, was up again, now showing a 6.7% year over year gain. Aside from April 2020, this is the highest wage growth in 40 years. And aside from three months in 2019 and 2020, the unemployment rate was the lowest (or equal to the lowest) in over 50 years.

The blemish is inflation. Most likely, inflation-adjusted wages have risen by 1% or less in the last year. On to cartoons.

A brief history of recent misspeaks:

Biden tries a different way to get Putin:

Florida’s Governor DeSantis says the mouse is the real enemy of kids:

This Thomas’s dinner conversation is straight-up ok:

Fox hires Caitlyn Jenner, but there were unforeseen issues:

Free Brittney:

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Monday Wake Up Call – March 7, 2022

The Daily Escape:

Watson Lake, near Prescott, AZ –  February 2022 photo by Steve Matten

Last week, the Labor Department released its monthly Nonfarm payroll report. It showed strong hiring, and a substantial decrease in unemployment. Employment rose by 678,000 in February, the unemployment rate fell to 3.8%, wages rose by just 1 cent to $31.58 per hour, although wages have risen 5.1% over the past 12 months.

We still have 2.1 million fewer jobs (1.4%) than we had in February 2020 just before the start of the pandemic. At the average rate of jobs growth for the past 6 months, it’s about 4 more months before we get back to where we were. From Krugman:

“…what people are actually experiencing in their daily lives is a very strong job market. For example, according to the latest survey from the Conference Board, 53.8% of consumers said that jobs were “plentiful,” a near-record, while only 11.8% said that jobs were hard to get.”

More from Krugman:

“Yet the public doesn’t believe it. According to a new survey by Navigator Research, only 19% of Americans believe that the US economy is experiencing more job growth than usual, while 35% say that it is experiencing more job losses than usual.”

Pandemic unemployment peaked in April 2020 at 14.7%. Back then, Congress was afraid of the country entering another depression, or at best a recession similar to 2008. Congress decided to prop up the economy through a fiscal stimulus called the first CARES Act. Many politicians have talked about how the CARES Act was the financial jolt that has caused inflation to spike.

You probably didn’t realize just how large that unemployment aid was. When unemployment benefits were at their peak in June 2020, the government pushed $1.395 trillion dollars out to the unemployed. Here’s a chart from the St. Louis Fed that shows how fast and how high that cash injection into the economy moved:

Today, these unemployment payments have shrunk by 98% to $26.7 billion. So where in our economy did that $1.4 trillion go? It went primarily to goods purchased locally at Mom & Pop stores and supermarkets. It also went to the big box stores like Walmart, Costco, and Target. It went to Amazon and hundreds of online retailers. At the Mansion of Wrong, it also went to Peloton.  And it went to online services, like Netflix and online education.

Americans spent less than usual on services, so we saw huge job losses in the services sector. Statista reports that we are still short 3.75 million jobs in the services sector and less than .5 million in manufacturing. Leisure and hospitality account for 1.38 million of the total, while losses in education, health services and government also remain high.

Much of today’s inflation is the result of this trillion-dollar unemployment stimulus. Barry Ritholtz interviewed Rebecca Patterson, Director of Investment Research at Bridgewater Associates. She described how the one-two punch of monetary and fiscal stimulus led to a “Demand Shock” where demand for durable goods overwhelmed what manufacturers could supply. She says that while global manufacturers ramped up production by 5% above pre-pandemic levels, demand for those same goods rose by 20%. This is a large part of the inflation spike we’re experiencing, and why the Fed has called it a “transitory” problem.

America’s response to the pandemic reminds us that the way our government responds to crises brings different impacts to different parts of our society.

The Federal Reserve’s expansionary monetary stimulus since 2008 has primarily benefited corporations and the well-off who could buy ever more expensive assets with very cheap money. Fiscal stimulus like the CARES Act and like the new infrastructure bill mostly benefit the bottom 50% of the country: low-wage labor, the unemployed, and the middle class.

So the economy is doing just fine for the top 10% and the upper middle class. But people who make minimum wage aren’t flying to Barcelona this year. They’re not eating at high-end restaurants. When they shop, it isn’t at boutiques. They continue to split financial hairs trying to figure out how to feed their kids and keep a roof over their heads, because rents are rising everywhere in the US and the price of food is going out of sight.

Add to this the interest rate hikes we know are coming, and things aren’t getting better for the lower middle class or people in poverty.

The discussion of the impact that fiscal stimulus had on our labor market isn’t finished. No one really knows why so many people haven’t returned to work, despite the roaring economy.

Time to wake up America! Some Americans are going through hard times. Clearly, people in Ukraine are facing terror that is much worse than here at home. Maybe this cover of Neil Young’s “Harvest Moon” by The Brothers Comatose with AJ Lee can bring a momentary comfort in this age of discomfort:

Watch it, you won’t be disappointed.

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Why Isn’t Good Economic News Covered?

The Daily Escape:

Crater Lake, OR – winter 2020 photo by Austin James Jackson photography.  

We need to talk about the economy. The underlying economic news is very good, but both the press and the Republicans say it’s bad, while Democrats say very little.

There are three things being discussed. First, inflation is terrible. This is a key Republican talking point about how Biden is failing the country. Second, jobs are going begging in what journalists have dubbed “The Great Resignation”. This is supposedly the fault of giving too much in unemployment benefits, allowing people to stay home rather than work. Third, if the economy is so great, why isn’t employment growing faster?

Starting with the last point, take a look at this graph showing jobs growth since 2008. The blue bars are when a Democrat was president, and the red bars are when a Republican was president:

That last blue bar is the strongest jobs growth in history. During 2021, the US created more than 6 million jobs, the most since records began in 1939.

That means Biden has just managed a year of stunning jobs growth, but consumers were constantly fed headlines about “disappointing” jobs reports, because the initial reports rarely align with skewed “expectations” by economists and pundits. Explaining this should be fairly easy, but the press can’t seem to get it across to the American people.

In addition, wages have been moving up across the board:

In December, average hourly earnings for Production and Non-supervisory Personnel rose $0.12 to $26.61, which is a 5.8% year over year gain. This shows that American workers are finally building some economic power. People have choices right now. After years of worker insecurity in the wake of the financial crisis followed by the pandemic, they have options. Jobs are going unfilled, while virtually no one is getting laid off.

The unemployment rate has now fallen close to a 50 year low, at a level exceeded only by one month in 2000, and during 2018-19. The economic result of this is visible on the graph above.

While employment is continuing to be strong, we’re still lagging in terms of filling job openings created by pandemic losses. America must gain an additional 3.6 million jobs in order to equal the number of employees in February 2020, just before the pandemic hit. At the current average jobs growth rate for the past 6 months, that should take about 7 more months to reach the pre-pandemic employment level.

Economists are tying themselves in knots trying to figure out why more Americans aren’t going back to work. Some of those reasons are understandable: Fears about health, caring for someone who’s sick, and lack of childcare. But there’s a big reason that isn’t talked about. Employment has declined in the last year among workers who were 55 or older at the start of the pandemic. A WaPo analysis found that over 1.5 million more people were retired in November 2021 than would have been expected based on pre-pandemic trends. That would help explain the employment story if the mainstream media would look at the big picture instead of dutifully following Right-wing propaganda.

Turning to inflation, the WaPo says:

“The US economic recovery from the Covid pandemic was the strongest of any of the big Western economies…The Biden stimulus pushed the bank accounts of even the lowest-income Americans to unexpected heights. On average, they had more than twice as much in their savings accounts as they did when the pandemic began.

The Federal Reserve…helped, too. It held rates near zero and pumped hundreds of billions of dollars into the economy. The twin fire hoses of cash — one from Congress, one from the Fed — sent Americans’ spending roaring back.”

Bloomberg reports that manufacturing companies are saying their supply chains are performing a little better. Their message seems to be that things aren’t worsening.

While oil prices get the most attention, the ISM surveys show manufacturers say the cost of more commodities are falling. In December, there were eight commodities that were identified as falling in price. In November, it was four. In October, just one (wood).

Finally, the NY Fed is out with its 2022 inflation expectations survey. It shows that In December, US consumers expected inflation to average 6.0% over the next 12 months and 4.0% over the next three years. Those expectations were unchanged from November 2021.

It also showed that Respondents were more optimistic about their future wage and income growth, as well as their ability to hold a job or find a new one.

One big question for Republicans is what will they pivot to if inflation actually slows down?

A larger question is why the Democrats and the press can’t explain good news when it happens?

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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.

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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”:

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Dems Must Persuade the Persuadable

The Daily Escape:

Sunrise, Jensen Beach, FL – November 2021 photo by Patrice Ostradick

More about the Dem’s messaging problem. The latest jobs report showed that we added more than 530,000 new jobs in October. And the DOL also revised its estimates for September and August, confirming an additional 235,000 positions were created.

That’s 766,000 jobs we didn’t know about until last Friday.

The news sent the Dow Jones upward (again). It ended at another all-time high, 36,327. Since Biden was elected last year, the market is up 40%. That’s $14 trillion in new wealth that has landed in quite a few pockets. But the media still covered a Biden administration in disarray. From Eric Boehlert:

“…on Friday, news consumers visiting WashingtonPost.com had to scroll down past 75 different stories and links before they found the first mention of the blockbuster jobs report…..at the top of the Post site Friday afternoon was a column about how the White House is having trouble spreading good news about the economy.”

Again, the media going all “gotcha” on Biden. And it’s having an impact on his poll numbers, which took another dive in a USA Today poll over the weekend that shows Republicans holding a lead on the 2022 Congressional ballot. It found that Biden lost support among the Independent voters who delivered his margin of victory over Trump one year ago:

  • 46% said Biden has done a worse job as president than they expected, including 16% of those who voted for him. Independents, by 7-1 (44%-6%), say he’s done worse, not better, than they expected.
  • 64% said they didn’t want Biden to run for a second term in 2024. That includes 28% of Democrats.

Democrats need to understand their peril. The NYT’s front-page story, “Americans Are Flush With Cash and Jobs. They Also Think the Economy Is Awful” shows their dilemma. The economy is by all accounts on fire, but consumers and voters think it’s floundering. You might question just who is flush with cash, but the negative views of the economy seem to be tied to the effects that rising prices and shortages have on families. Regardless of the exact causes, after decades where the lack of jobs drove economic sentiment, inflation now appears to be a force driving opinion about the economy.

Prices for many consumer goods are rising, and as we said yesterday, it’s impossible to win elections by telling voters that their concerns are imaginary. From Bloomberg (paywalled):

“It’s not all negativity: A record-high 74% of respondents told Gallup in October that this is a good time to find a quality job, and 65% told AP-NORC pollsters that their personal financial situation was good. The Conference Board’s Consumer Confidence Index rose in October and, while lower than before the pandemic, is higher than at any time between 2001 and 2017.”

The reality is that consumer prices have risen faster over the past six months than at any time since the early 1980s. And there’s increasing evidence of a partisan bias in consumer sentiment, with most people judging the economy more favorably when the person they voted for is president.

Remember that the USA Today poll says 64% think Biden shouldn’t run in 2024. Maybe some of today’s economic pessimism has to do with people downgrading their view of Biden’s competence after the surge in the Delta variant that killed so many, while our messy withdrawal from Afghanistan was seen by many as humiliating.

The Democrats’ conundrum is how to respond both to the economic concerns and the cultural attacks. They can’t win by simply pointing to their actual policies on specific issues. They must respond to the attacks on “wrong way for the country” by honing a message that works for the persuadable Independents. We live in a 40-40-20 country in which 40% percent are hard-wired for either Party, and 20% are swing voters, who are primarily located in the suburbs. They largely control the outcome of elections.

Democrats need to study the art of persuasion. The Right is driven by nostalgia: they want to go back to a “simpler time”. The Left is motivated by change, to ensure rights for all, whether that’s healthcare or fair wages. if Democrats want to win against the highly organized right-wing media ecosystem, they must find a series of messages to persuade Independents.

We need a tune for Tuesday. Here’s Willy Nile with something brand new, “The Justice Bell” a tribute to John Lewis, from his August 2021 album, “The Day The Earth Stood Still”:

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Our Curious Job Market

The Daily Escape:

Cranberry harvest, Carver, MA – October 2021 photo by Sarah Stiles Cabe

Robert Reich commented to Newsweek about the unexpectedly low US employment figures, that American workers are engaged in, “the equivalent of a general strike.”

He was referencing Bureau of Labor Statistics (BLS) numbers that showed US employment increased 194,000 in September, nearly 300,000 jobs shy of estimates. Despite a record level of job openings and 7.7 million out of work, many employers report difficulty filling positions. From Reich:

“In reality, there’s a living wage shortage, a hazard pay shortage, a childcare shortage, a paid sick leave shortage, and a health care shortage – and American workers are demanding an end to all these shortages. Or they won’t return to work.”

So, the question is: are Americans saying “take your shit job and shove it” to corporate America?

Reich may have a point, but the current employment situation is both good and bad, and it’s a lot less political than he thinks it is. The numbers make clear that ending unemployment benefits wasn’t as effective in generating new employment as conservative politicians said it would be.

The inability to find childcare, or concerns about the safety of the available jobs, and the possibility that people saved some amount of their former emergency benefits and it’s providing them with a cushion, are all possibly contributing to the current jobs situation.

There are other factors at work. The data also show a record number of people voluntarily quitting their jobs (meaning they are not eligible for unemployment benefits). The number of quits (to work for another company offering higher wages and benefits, change careers, or stay home and take care of the kids) spiked by 242,000 people to a record of 4.27 million in August, up 19% from August 2019.

A historically high number of quits suggests a tight and competitive labor market that’s encouraging workers to switch jobs. The highest quit rate was in leisure and hospitality (6.4%), a sector that includes accommodation and food services (6.8%), retail (4.7%), and professional and business services (3.4%):

In total, 892,000 workers in accommodation and food services quit in August, equal to 6.8% of all workers in that sector. Quits are usually high in this sector. In August 2019, during that pre-Covid tight labor market, 5.1% quit.

The Labor Department also reported that there were 10.4 million job openings in August, up by 46% from August 2019. A high number of job openings pushes employers to offer higher wages, better benefits, signing bonuses, and similar enticements to help bring qualified people on board.

Despite what Robert Reich says, workers now seem to have some pricing power. When they leave a job for better wages and working conditions at another company, they create a headache for their old employer who now has to find a new employee by also offering a better deal.

But it all doesn’t quite add up. On the one hand, there are tons of jobs going begging. On the other hand, the labor force participation rate is well below pre-pandemic levels. In September, the civilian non-institutional population in the US was 261.8 million. That includes all people 16 and older who did not live in an institution, such as a prison, nursing home or long-term care facility.

Of that civilian non-institutional population, 161.3 million were participating in the labor force, meaning they either had a job or were actively seeking one during the last month. This resulted in a labor force participation rate of 61.6% in September, down slightly from the 61.7% in the prior two months, but 0.2 points higher than the 61.4% when Biden took office.

The number of Americans counted as not in the labor force, meaning they didn’t have a job and were not looking for one, rose in September to 100.4 million, up 338,000 from August.

If the job market is so good, why are so many people staying on the sidelines? That’s not consistent with a tight labor market, so there has to be something missing from the data. We do know that a big chunk of employees have taken early retirement. The number of retirees shot up by around 3.6 million during the pandemic, according to the Federal Reserve Bank of Kansas City. At the usual pace, that figure would have been around 1.5 million.

Are people just working off the books more now? Is it people who can’t get/afford childcare?  Or is it simply a mismatch of skills and jobs? We don’t need as many people staffing tourist jobs, but we need more people working at the docks and driving trucks?

Whatever is going on, there are millions of people doing it.

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