Recent posts

#1

Off the Record / Re: What does a TRUMP presiden...

Last post by Zoupa - Today at 08:49:04 PM

Homelessness increases by 20% every year in the US, but there is no war in Ba Sing Se.

#2

Off the Record / Re: What does a TRUMP presiden...

Last post by Admiral Yi - Today at 08:01:11 PM

You'll need to define what you mean by "low".  CPI has been hovering between 2.7 to 3.0 percent since June.  That is above the Fed target rate of 2%.  Three percent inflation is generally not considered low by 21st century standards.

If by "low" you mean well below historically high rates in a broader sense like the 70s-era inflations, than yes it is low.  It was also low and declining in 2024 by that standard and yet Biden lost the election on that issue.  So "low" doesn't always translate into low in public perception.

Public perception is driven by several decades of historically low inflation rates which set expectations and then the shock of the COVID exit price level increase.  Public perceptions are that "prices are high" and thus moderate levels of continued price increases aren't reassuring.  Trump did himself no favors by overpromising that he would bring prices down, which was not going to be in the cards.

Public perception is likely not impacted by Trump's leaning on the Fed to lower rates, but that is a serious concern which does raise the risk of future inflation.  The US economy is now in a race between what will happen first: inflation driven by loose monetary + fiscal policy + massive private investment boom OR a crash if the AI investment bubble pops.

https://www.usinflationcalculator.com/inflation/current-inflation-rates/

I found your first argument unpersuasive.  As the linked table shows, inflation at or above 2.7% was not at all uncommon during the 21st century.

Your second argument is interesting. I found this graph

https://fred.stlouisfed.org/series/LES1252881600Q

which shows real wages spiking in 2020 (covid stimulus?), dropping sharply, then continuing the steady pre-covid trend upward.  So it seems your theory only makes sense if expectations were fixed by the experience of 2020 exclusively.

this graph combines hourly and salaried workers; a breakout of hourly could yield different results.

#3

Off the Record / Re: What does a TRUMP presiden...

Last post by crazy canuck - Today at 07:39:55 PM

Why not?

Because communication, ideally, should have a point.

Yes

#4

Off the Record / Re: What does a TRUMP presiden...

Last post by Admiral Yi - Today at 07:35:47 PM

Why not?

Because communication, ideally, should have a point.

#5

Off the Record / Re: What does a TRUMP presiden...

Last post by Valmy - Today at 07:15:09 PM

Fair.

What I'm really wondering is what you think drives the current sentiments we hear about the affordability crisis (that there is one and that it's a big deal), if inflation is actually low?

Are there actual economic realities behind it separate from inflation, or is there something else that drives the narrative?

To be transparent - I don't have a strong opinion on the issue and no real understanding of how real or not real the affordability crisis is in the US.

My reddit feed has a semi-steady stream of articles with headlines with "'I Can't Afford This' Trump Voters in Rural America Stunned as Cost of Living Keeps Rising" and I'm wondering how real it is beyond the anecdote.

To be blunt I think it's Democratic fake news. CNN and NPR hunt down some anecdotes, avoid quanitifying it, and call it a thing.

It is the result of our policies in the western world over the past 40 to 50 years. Wages have not caught up with inflation so now housing, education, food, and health care are becoming crushingly expensive. This has been a slow process that has developed over decades.

Fortunately other goods like TVs are now super cheap. Unfortunately while people don't need TVs they do need housing, food, and health care. And education is kind of important for lots of people as well, even more important than TVs.

At least that is how I view it.

#6

Off the Record / Re: What does a TRUMP presiden...

Last post by The Brain - Today at 06:24:56 PM

I wonder if the US military has been purged sufficiently of dissenters that it would move against a NATO ally.

If my employer acted the way the US does I would quit instantly. Generals and admirals can get well-paying jobs in the private sector; those who remain now are true believer Republicans.

#7

Off the Record / Re: What does a TRUMP presiden...

Last post by DGuller - Today at 06:02:05 PM

One constant in politics we have to be aware of is that half the people believe that unemployment numbers don't measure real unemployment, and inflation figures don't measure real inflation.  Which half depends on who's in power, but I remember it going back to George W. bush times at least.  That doesn't mean that there will never be a time when those beliefs are true, but one has to approach them with critical thinking.

That's true but part of it is understanding what these things measure and what they don't. Inflation measures the degree of increase in prices over a particular period but not the overall price level.  The impact of a large price level jump can take some time to be absorbed.  If people feel squeezed because of a high price level, they won't necessarily be reassured because prices only went up 2.5% annualized last month.

Unemployment measures the number of actively seeking workers who couldn't get jobs. It doesn't measure demoralized people who stopped looking for work because it seemed hopeless.  It doesn't measure the quality of jobs on offer or whether people are in jobs they think commensurate or appropriate to their skills.  It doesn't measure people who went back to school because they couldn't find work. It doesn't measure a spouse who decided to focus on home making because the jobs on offer were so poor.  It doesn't measure reduced opportunities for promotion, or reduced hours available or worse employment terms.  It doesn't measure lots of things people care about re the job market.

Let's take the unemployment example.  Yes, the unemployment numbers that are in the headlines ignore all those people.  Where the hand-waving happens is the implication that things that are unusually bad right now, in a way that wasn't the case when their party was in control.  "People only started getting discouraged when that guy took office." 

Curiously enough, when people are trying to explain to you that the headline (U3) unemployment numbers don't measure all sources of labor underutilization, they almost never mention that there is also a U6 number that does measure more sources of labor underutilization.  I suspect they never mention it because it never really tells a different story directionally that the headline U3 number does.

#8

Off the Record / Re: What does a TRUMP presiden...

Last post by Syt - Today at 05:55:33 PM

Meanwhile, Stephen Miller's wife on Xchan:



I wonder if the US military has been purged sufficiently of dissenters that it would move against a NATO ally.

#9

Off the Record / Re: What does a TRUMP presiden...

Last post by The Minsky Moment - Today at 05:41:46 PM

One constant in politics we have to be aware of is that half the people believe that unemployment numbers don't measure real unemployment, and inflation figures don't measure real inflation.  Which half depends on who's in power, but I remember it going back to George W. bush times at least.  That doesn't mean that there will never be a time when those beliefs are true, but one has to approach them with critical thinking.

That's true but part of it is understanding what these things measure and what they don't. Inflation measures the degree of increase in prices over a particular period but not the overall price level.  The impact of a large price level jump can take some time to be absorbed.  If people feel squeezed because of a high price level, they won't necessarily be reassured because prices only went up 2.5% annualized last month.

Unemployment measures the number of actively seeking workers who couldn't get jobs. It doesn't measure demoralized people who stopped looking for work because it seemed hopeless.  It doesn't measure the quality of jobs on offer or whether people are in jobs they think commensurate or appropriate to their skills.  It doesn't measure people who went back to school because they couldn't find work. It doesn't measure a spouse who decided to focus on home making because the jobs on offer were so poor.  It doesn't measure reduced opportunities for promotion, or reduced hours available or worse employment terms.  It doesn't measure lots of things people care about re the job market.

#10

Off the Record / Re: What does a TRUMP presiden...

Last post by The Minsky Moment - Today at 05:34:03 PM

I listened to an NPR story about affordability and it seems like nothing more than an attempt to complain about inflation while inflation is low.

You'll need to define what you mean by "low".  CPI has been hovering between 2.7 to 3.0 percent since June.  That is above the Fed target rate of 2%.  Three percent inflation is generally not considered low by 21st century standards.

If by "low" you mean well below historically high rates in a broader sense like the 70s-era inflations, than yes it is low.  It was also low and declining in 2024 by that standard and yet Biden lost the election on that issue.  So "low" doesn't always translate into low in public perception.

Public perception is driven by several decades of historically low inflation rates which set expectations and then the shock of the COVID exit price level increase.  Public perceptions are that "prices are high" and thus moderate levels of continued price increases aren't reassuring.  Trump did himself no favors by overpromising that he would bring prices down, which was not going to be in the cards.

Public perception is likely not impacted by Trump's leaning on the Fed to lower rates, but that is a serious concern which does raise the risk of future inflation.  The US economy is now in a race between what will happen first: inflation driven by loose monetary + fiscal policy + massive private investment boom OR a crash if the AI investment bubble pops.