The debate over the future of Democrats is almost settled with neoliberal elites actually prevaling even more than they did in 2016.
The argument is mainly this: Biden caused inflation by pursuing the expansion of the welfare state and this loss is therefore self-inflicted and caused by progressive ideas.
The neoliberals overemphasize government spending and wage increases as causes for inflation, while they minimize supply chain issues, agricultural prices, corporate profits and the cascading effects of increases in federal interest rates on things like mortgages, auto loans and credit cards.
Who is right? More than half of inflation had nothing to do with government spending or wages. The Federal Reserve has said so many times.
The argument is wrong not only regarding the causes of inflation, but also regarding the supposed expansion of the welfare state.
Trump expanded the welfare state (due to Congressional Democrats) and was rewarded for it:
1. Created Pandemic Business Assistance (that won't be repayed);
2. For the first time actual small businesses were eligible for government help;
3. For the time time self-employed persons were eligible for either business assistance or unemployment insurance;
4. Expanded Unemployment insurance, for the first time created standard national/federal benefits;
5. Expanded Medicaid eligibility;
6. Gave out free vaccines and tests;
7. Expanded Obamacare eligibility and subsidies;
8. Expanded SNAP (food stamps) eligibility;
9. Improved SNAP (food stamps) benefits;
10. Sent out several Univeral Basic Income checks, first time that more than one check is issued (and they were issued directly to people instead of reducing taxes like Obama);
11. Established national Eviction Moratorium;
12. Expanded federal housing spending;
13. Expanded federal spending on childcare;
14. Expanded the Child Tax Credit;
15. Subsidized state and local budgets.
Under Biden basically all of this was rolled back.
What Biden did was fund Industrial Policy.
He allowed 2 years to be wasted with idiotic negotiations with Sinema and Manchin. Both him and progressives are responsible for not wrapping up those negotiations as soon as it was clear that the "moderates" were negotiating in bad faith.
Yes there were substantive mistakes on some add on policies, like the ill designed electric vehicle incentive that can basically only be used by the upper middle class.
But Biden didn't achieve his proposed expansion of the welfare state. Not a single new benefit for ordinary people was created under Biden.
Trump and Republicans were incredibly smart in learning from the mistakes of Obama and the Great Recession.
It was Trump who spent and spent and Biden who cut and cut.
Republicans and Trump also made sure that as soon as Biden came into office all the benefits would start to expire.
What neoliberals are trying to do is rewrite history (again).
Neoliberal elites have almost no experience of the actual real economy, much less any lived experience of the welfare state as it actually works.
They cherry pick macroeconomic data like unemployment, GDP and the stock market, while downplaying consumer debt, auto loan purchases and defaults and the effects of interest rate rises on housing affordability and construction.
This is not done merely because of ignorance. They defend their class interests and the interests of economic actors they identify with and are funded by.
We now have a large coterie of mainly white male writers gaslighting Democrats about the state of the economy and misleading about economic and policy history while still claiming to be economic progressives.
“ white male writers gaslighting” is a great example of why Democrats lost and progressivism got rejected around the country.
As far as you’re argument goes, I think it’s important to point out that Biden try to keep the expanded well for state and he just didn’t have the votes. It’s also clear that the additional spending did add 2-3 points to inflation. Could Harris have one if inflation only paid that 6% instead of 9%? I don’t know. But it didn’t help.
You also really didn’t grapple with the key pieces of this article: that voters hate inflation more than they hate unemployment.
Wages mostly have, but people still remember the lower prices and have not adjusted to the new norm. Other costs, such as housing, still remain too high
Thanks. My prior on this is that the low interest rate low inflation economy for the past 20 years or so has been great for the stock market and wealthy people but has widened inequality and not been great for the working class/middle income people (or poor people.) Some of the 2021-2022 inflation was Covid-specific/supply chain-related, etc. And some was caused by a generous Covid recovery bill that mostly helped middle income and lower as well as significant wage gains in the lower to middle income range. Rising wages for the bottom half of wage earners is, all else being equal, inflationary.
But if inflation is politically toxic, what alternatives do we have to provide support to poor people and lower earners that won’t also cause inflation to move higher? I realize not everyone shares my goals, but we progressives need to figure this out.
2. Fixing supply side issues to reduce prices (building more housing, hiring more docs, breaking up monopolies)
3. You can run the economy hot. To a point. Harris probs would have been ok if inflation peaked at 4%. I don’t know what the line is for inflation, but it’s there!
I identify more with white male workers who voted against Democrats due to inflation than with white male writers who talk about inflation as a way to move Democrats back to fake centrism.
Under the guise of saying that the welfare expansion should be paid for in the future, the real argument is that the welfare state can't be expanded because you need to convince upper middle class Democrats to raise taxes on themselves.
The underlying argument is that soak the rich is not enough nor correct. These writers know about the tax ballots in blue states failing.
Their recipe is therefore nothing more than the status quo.
Given that these writers also support mass immigration except they admit it is politically unpalatable and they oppose tariffs and support globalization, it is clear to me that these writers are in no way economic progressives. These ideas come straight out of a libertarian playbook.
Summary: Despite a massive increase in unemployment starting in March 2020, consumers’ average financial situation improved in the first several months of the pandemic and continued to improve through June 2021. We find that pandemic assistance policies such as expanded unemployment insurance and loan flexibilities are responsible for many of these improvements. Most pandemic polices—including extended unemployment insurance, eviction moratoria, and mortgage and student loan flexibilities—have recently ended or will end soon. Our results suggest these programs helped protect consumers during the pandemic, so their expiration may lead to increased consumer distress unless the economic recovery is strong and equitable enough to make up for the loss of protections.
It is also next to irrelevant moving forward as most inflation was caused by supply chain issues very specific to Covid.
Maybe this will come up in the next post about out of touch elites. But, Americsns don't care about inflation. They care about prices. Inflation going down does not mean that bread, milk and eggs are cheaper. The economic model does not reflect the lived experience of the economy . And elites have chosen the model over the lived experience.
This is both true but it's kind of circular IMO. Americans care about price levels, yes, but you can't remove the time component entirely, and once there is a time component, you're back to talking about inflation.
For instance, nobody cares that we can no longer get a shave and a haircut for two bits. That is, nobody is mad that price levels aren't where they were in the 1930s. But people do care that they aren't where they were at the end of the 2010s.
So yeah, the typical yearly or annualized inflation rate is too short. Saying "inflation has been on target over the last year" is meaningless to people who are thinking about it over some longer timescale. But what *is* the important timescale? I'm confident in saying that it's more than a year and less than a hundred years... From an electoral standpoint it might simply be "since the last time power changed hands". Or (more frustratingly) it might be "since the last election year", having seen this weird phenomenon where Biden got associated with stuff that happened in 2020 despite not being president until 2021. Or maybe it really isn't quite so political, maybe it really is more like a fixed amount of time that feels "recent" to people, like 3 or 5 or 7 years.
I'd be interested in seeing how well the inflation rate over different time ranges correlates with different sentiment measures.
Speaking only from anecdotal personal experience, I think people have an anchoring bias with tolerable price levels, and they usually anchor to where prices were at the point that they start budgeting carefully, typically in early adulthood (late 20s and 30s). My grandparents actually DID used to balk that prices weren’t where they were in the 60s. My dad marvels that things aren’t what they were in the 90s. And for my part I do occasionally feel sticker shock by where things are in 2024 vs where they were last decade.
And I think on a basic level people feel that as they work hard and build more wealth, prices should stay largely the same so they can benefit from their wages increasing due to their experience and productivity. Rising prices, even if they accrue to a net increase in real wages, psychologically make people feel poorer. Frankly most Americans lack the economic sophistication to appreciate the claim that everything being 5% more expensive is fine if they make 10% more money.
And remember that most voters had never seen significant inflation - how many voters were actually doing any serious spending/budgeting in 1980. Definitely some, but I am quite sure it is far from most.
It also significantly raises the mental load of evaluating how good a deal something is. Even if you appreciate what a "real" wage is and can compare your nominal income to the CPI, evaluating *relative* prices is difficult when all the nominal prices are going up, and at different rates.
People like to make long-practiced things automatic, but this aspect of inflation defeats automaticity and requires a lot of thought. Which is really annoying!
No one seems to be talking about this, but the most shocking fact about the recent election is that 12 million Biden voters from 2020 stayed home in 2024. I think anger over inflation had a lot to do with this.
I invite you to read "Vanished into thin air: Where did 12 million Democratic voters go?"
California is gigantic and counts votes incredibly, incredibly slowly. They're slow at everything election-related, even slower to release post-election voter files. (Last I had to work with one I recall it being out the following August.)
So that 12 million figure will go down a lot in the next few weeks, though I couldn't say how much.
I was assuming that these figures were educated guesses about the final vote totals based on the fact that the West Coast states tend to count so slowly.
The voters weren't there in 2024, because they were at work or busy. 2020 was Covid and people had less work obligations. They were freed up to vote. 2020 was the anomalous year.
And even with that extra 15 M voters, Biden barely eked out a win of maybe 170 k votes across swing states. His win was miniscule. 2024 is back to Earth in a center-right country.
Inflation is to voter experience what theoretical physics is to bridge construction, connected but not relevant. Nobody chooses an engineer by quizzing her on physics. The academy's need for certainty and equations has caused us to forget that all of modern economics should come with a disclaimer that says " this works only if humans are Vulcans and always do the logical thing. An hour economics relevant to life on Earth is just too unsatisfying'
Inflation is not a complicated theoretical construct, it is just "how much has the price level changed over some time period".
My point is that there is no such thing as caring about "price level" with no associated "time period".
Nobody cares whether we can currently get more or less wheat for a fixed amount of gold compared with the ancient Romans. People care whether they are paying more for things than they were "recently". But "recently" is a time period, so this is once again a question of inflation.
You can instead look at things that really do cancel out the time component, like income to expense ratio, both in real terms. But I think this is misleading, because people do see, and thus care about, their spending at the nominal price level.
I did read it and we are doing n complete agreement related to our irrelevant opinions about how inflation works and where the point of misunderstanding is. Where we differ is at the point of whether the conversation is relevant or not to this or any other election. I am willing to bet that you agree with me that the worst possible way to bring prices down is to have government mandate that they go down. As horrible as that policy has been historically, if I were Ukraninan or Taiwanese today, I would have prayed that Biden had done it. That would have addressed the fury of the awakened electorate and Ukraine wouldn't be about to lose the war and Taiwan wouldn't be for sale.
What you're saying is basically that voters averaged the inflation rate we experience 2020 to 2024 and that was their evaluation of Biden.
Dems wanted them to simply ask what inflation was Nov 2024, or what second derivitive was within the last twelve months, or whatever cherry picked data point they wanted.
1) Dems shut down the economy over COVID
2) Dems passed a bunch of massive spending bills on party line votes to pay for that
3) The overall inflation rate over the last four years was bad as a result
That's a completely accurate picture to tell. People aren't going to give you credit for partially fixing the mess you caused (and did they even fix it, seems more like they just waited till it went away on its own).
Lastly, inflation is lower then two years ago, but core inflation is still pretty high relative to the pre-2020 norm and long rates aren't coming down.
The tragicomic thing is that you're completely convinced of this narrative blaming Democrats, while #1 and #2 both happened during the Trump administration.
Eh, I think you can point to the actions of Democrat-controlled states (e.g. California, where I spent 2020) and lump those in with "Democratic governance". There's a reason why lots of fallout from Covid policy didn't "stick" to Trump.
This narrative that blue states and red states responded significantly differently to Covid is very overblown. The spring / summer 2020 shutdowns and the resulting unemployment and other major disruptions all happened at the national level. Even schools - the area where I think the red blue differential was most damaging - reopened in red and blue states within a few months of each other.
You're right that there is a reason this stuff didn't stick to Trump. But the reason is that he is a liar and his lies are supported by the entire right wing media ecosystem in lockstep.
Actually core inflation is fairly solid at 2% - and pre 2020 was a long stretch of relatively low inflation as the aftermath of the 2008 crash (which was caused by the Republicans).
And it is very clear that the supply chain issues (transitory) played a significant role in inflation - the way it came down without massive unemployment is a sure sign of supply side rather than demand side inflation
Everyone remembers what prices used to be, and even if they understand cumulative inflation rationally, they feel the prices emotionally.
When you talk to older folks about money, it’s like entering a time warp: I’m thinking about Grandpa Simpson. “Now, to take the ferry cost a nickel, and in those days, nickels had pictures of bumblebees on 'em. "Gimme five bees for a quarter," you'd say.”
Covid and the high inflation of the 2020s sped up economic time. The “dollar menu” is dying like the nickel & dime stores of old. That was supposed to happen gradually, but it happened suddenly.
I think they care about both, both P and Pdot. It depends on how rapidly different prices are rising, and how some prices (especially energy) fall back, while others (like the price of eggs) remain stubbornly high.
Also, there are times when unemployment does matter to people a lot more. But Noah's argument, that inflation is diffuse and nearly universal, while unemployment is concentrated, is definitely correct. And unemployment is concentrated by industry, class, geography, and in time as well -- meaning, concentrated in recessionary periods. We saw that too in the 1970s, in the 1974-75 and 1980-82 recessions.
Thankfully, yes. The elites went over the myopic perspective of lived experience for doing the right thing. It just sucks that it had an electoral cost, but in all non-electoral aspects _that was the right thing to do_.
Looking back at US history, I don't think the lesson is that Americans are allergic to hardship, I think the lesson is that you need to lead them through it. Biden was a good steward of the economy, but if his administration knew that inflation was coming, they needed to TALK about it. They needed to be up front that this was coming, and that it would hurt and he was sorry it would hurt, but it was the best way to get their neighbors back to work, and the best way to secure a good future for their children. He needed to lead, and instead he left the leading to any jerk with a microphone.
I will give Trump credit for one thing: he leads. He leads us to dark, awful places that future generations will curse us for, but he leads, and that matters.
When NYT announced in '21 that Unilever and Proctor & Gamble--both very large multinationals with oligopoly-level market share--were raising their prices ~15% *over* their cost basis pricing, I realized that Biden needed to immediately shame them for their greed from the bully pulpit. Shame them for gouging consumers in a very difficult time. But he was too pro-business to do so. And the rest is history.
Harris picked up that thread in her brief campaign. But it was too little, too late.
Well, when she talked about anti price gouging efforts, they simply called her a socialist.... Large Corporations have realized that they can do whatever they want, and voters will simply blame the President instead of changing their consumer buying habits. Americans want to consume, and capitalism rarely punishes the people winning at capitalism, it usually just punishes the person in charge of the government and voters themselves.
I think there is a lot of truth to this. I can't think of a positive way to spin this, but a lot of this "leading through hardship" seems to require deflecting the blame for the hardship away from your own administration.
I think it's very interesting that Trump ended up being essentially not blamed at all for the truly miserable "hard-pandemic" year of 2020, while Biden did take the blame for the somewhat less miserable but still sucky "soft-pandemic" years of 2021 and 2022 (and some of 2023 maybe).
Some of this may be rational or sensible by first principles; it does make some sense IMO to think of the pandemic like a natural disaster, which sure, a leader can make worse or better on the margins, but fundamentally it is not their fault that it happened. I tend to think the shitty recovery years were just as much a part of the natural disaster as 2020 itself, but I can see why a lot of people saw a more direct through-line to a lot of those problems having been caused by the response itself. (I just think the problems of a much lesser response would have likely been a lot worse.)
But I also do wonder if Trump's just general shittiness as a person relative to Biden helped him here. Maybe he was just better at deflecting blame that he deserved than Biden was. And maybe deflecting blame is more of an important leadership skill than I want to think of it as being.
I'm not sure that's the only way to do it. I think the likes of FDR were up-front about it, and won repeatedly. It wasn't just warning people, it was assuring them that there was a plan and it would be worth it. If Biden - or even Harris herself - had been out front and taken their lumps but acknowledged how people were hurting and promised to do everything they could to make it better, I think they would have won.
The myth of Trump is that everything he does is on purpose, toward some master plan[1]. Whatever else he does, he talks, and he seizes on everything he can possibly take credit for, in a way that Democrats seem to feel is beneath them or unseemly or something.
That said, I'm not convinced it helped him that much this year. I think any other Republican candidate would have completely blown Biden or Harris out of the water, purely by virtue of not being Biden or Harris. Haley and that Florida schmuck are too-good politicians to have expended political capital running in the primary against the center of the GOP personality cult, if they thought there was a serious chance of losing in the general. I think it was only as close as it was because Trump sucks so much. I don't think he did evade blame, so much as just, he's not who Americans were mad at right now.
[1] The truth is that he's an incurious, venal narcissist with the attention span of a kitten on cocaine, but that's another matter.
Yeah but FDR came in by booting out the guy who got the blame for causing the depression... So yes, you can avoid this problem by being the person elected to fix a problem someone else is perceived as having caused.
But I'm not sure this is an optimistic story for us, with respect to Trump coming into office. I'd say there's a pretty good chance he's going to cause a bunch more inflation and successfully blame it on Biden anyway.
And the voters will believe it... Look at the UK, they are already blaming the new Labour Government on the issues caused by Tories over a decade. Voters want quick fixes to problems and are extremely biased in most cases. Seeing people that don't even own stock and now celebrating the stock market and economy just because Trump got elected is happening right now.
Oh it’s definitely not an optimistic story for us. The next four years are gonna SUCK. And I’m very worried about who comes after Trump. The Democrats aren’t immune to Trumpism, it just needs to come from someone who isn’t Trump. (If you’re a Transmetropolitan fan: after the Beast came the Smiler)
I completely agree and think this was why Biden adopting the transitory inflation stance was so incredibly harmful to him. Had admitted that inflation was a huge issues and that it was something he was working to address as quickly as possible I think people would have been a lot more forgiving. Tell them it was transitory was seen as a BS excuse, with the implication that nothing needed to be done as it would go away.
As a Senator, he worked behind the scenes so that everyone could take credit back home. He would work with guys like Strom Thurmond because he never had to run against Strom Thurmond. You don't humiliate a fellow Senator because you might need their vote tomorrow.
> I think it's very interesting that Trump ended up being essentially not blamed at all for the truly miserable "hard-pandemic" year of 2020
I don't think that's necessarily accurate, he did lose in 2020 mostly because of how 2020 went. The issue is that voters didn't feel like giving Biden a shot really improved things.
I believe that Trump was cruising to reelection before the pandemic, because the 2017-19 economy was really good. Voters gave him the second term they would have given him if not for the pandemic.
Second, the economic effects of the pandemic lasted long after people stopped caring about the virus itself. That's kind of a hard thing to explain to people. A series of fireside chats about where we were and what we were doing would have helped a lot.
I believe Biden did a good job, but was an extremely poor communicator about what the American people should expect and what he had done for them. By the time Harris took the lead, it was too late.
Deflecting blame is a red flag among people who understand leadership, but not among the general public. The gap between how engaged voters see the world and how disengaged voters see the world played a big role in how Trump got re-elected. This is also why Democrats have been doing much better in low turnout elections when Trump isn't on the ballot.
I'm not so sure Trump was cruising to re-election though. I think there's quite a bit of asymmetry between how much people reward presidents for a good economy vs. blame them for a bad one. I only remember people talking about how amazing the 2019 economy was in hindsight, essentially after Biden was elected. People didn't talk about it being bad, I just recall it being treated more like an inevitable permanent thing; “of course the economy is good with low inflation, low unemployment, and zero interest rates, this is America, duh”.
And I think it's easy to underplay after all the economic turmoil and international conflict, that in Trump's pre-pandemic “good ol’ days” that everyone was already sick of his bullshit. (I think lots of people are going to suddenly remember that here in a few months…)
But sure, I think the pandemic made it easier for Biden to win, and he still didn't win by much. But I think without the pandemic, we might have just seen a low-turnout snoozer with the same narrow result.
But I think this is also points to underlying fundamental issue with Joe Biden: he seems to be too old to be an effective communicator. The biggest thing that has hurt by the administration is that he was always just too slow and quiet to communicate anything.
Right? Dude has been so incredibly lucky in politics for the past 8 years. It's almost supernatural. Part of me is terrified about what he will do to the economy; the other part of me wonders if his unparalleled streak of dumb luck continues and somehow the economy thrives despite his best efforts to ruin it.
I think in this particular bout of inflation the thing that differentiates it from other inflationary periods is food prices. The price of eggs more than doubled in dollar terms from 2021-2022. Bread increased 36% over 4 years.
Economists should really differentiate between essential goods like food with no, or difficult, substitutions and the rest.
Although increases in food overall were more modest than these three items it was high enough at more than 23% over Biden’s term.
There is a problem in how we measure the impact here. The cpi is calculated by averaging a basket of goods relative to median income. Food is 11% of the basket, as this is what the median income earner spends on food.
So the median income earner sees a bit of a jump in his cost of living. Perhaps his wages have somewhat compensated (although from the graphs we see it hasn’t fully). And he can substitute the more expensive free range egg with the ordinary egg.
The lower you go down the earnings ladder the more the relative cost of food is. The bottom quintile spend 32% on food, including eating out - but that’s only 10% of the total spend. There’s no real substitution for low earners as they are probably buying as cheap as possible anyway, and this kind of increase becomes pretty noticeable.
(Fast food prices have also increased past inflation, for whatever reason, in the last decade and poorer people often do use fast food when unable to cook, but it’s less of an option now).
This is balanced a bit by a larger increase in wages at the bottom quintile over the term but I still think the food prices are very noticeable to the poor, and a statistic to the rest.
I'd also note that if you locked in a 3% mortgage rate/owned your home before 2020, you exist in essentially a different universe than anyone that didn't. Becoming a new homeowner is practically impossible.
Don't forget that low interest rates after 2008 were due to a financial crisis, where the Fed acted to stimulate the economy with abnormally low interest rates for a long time.
Noah should ask himself: Did you eat more, driving up the demand for food, when you received a stimulus check? Do you believe that food commodities are not traded in international market?
As for regular inflation statistics, you only have to turn to the Federal Reserve statitistics of manufacturing capacity utilization to find that manufacturing capacity utilization was not strained during this period....In fact, unlike other inflationary periods...it tracked non-inflationary periods. https://fred.stlouisfed.org/series/TCU I will admit that utilization dropped dramatically during covid, and following it, firms did increase capacity utilization, but not at the levels associated with prior inflation. Just look at the data on capacity utilization over time. Not indicative of excess demand straining capacity.
Food is a little different from inflation seen globally because:
1) the US produces about 20% of the world's food and is a leading exporter...so if the US has inflation in food prices, it is a big enough player that the world will likely have it as well.
2) Two of the other major food suppliers - the Ukraine and Russia, had a war...impacting their ability to produce and distribute food.
The second is important because of all the commodities impacted by the war...Food was the probably the biggest.
I read something perceptive (I thought it was Noah but it must have been another writer) that economists care about "core inflation", stripping out food and energy prices, while every working class person cares about "non-core inflation", i.e. only food and energy prices.
The price of eggs has been on a wild ride, with a significant surge due to the outbreak of Highly Pathogenic Avian Influenza (HPAI), commonly known as bird flu. This nasty virus led to the culling of millions of egg-laying hens, drastically reducing supply. In September 2024, the average cost of a dozen Grade A large eggs was $3.82, marking a 39.6% increase from the previous year. 
Chicken:
Chicken prices didn’t escape the turmoil either. The same avian flu that affected egg production also hit poultry farms, leading to a decrease in chicken supply. Coupled with increased feed costs and supply chain disruptions, consumers felt the pinch at the checkout. For instance, ground beef saw a 32% rise, with the lowest cattle numbers since 1951 due to drought and high supply costs. 
Bread:
Bread prices rose due to a combination of factors. The pandemic disrupted supply chains, leading to higher costs for ingredients and transportation. Additionally, the Russian invasion of Ukraine in 2022 impacted global wheat supplies, as Ukraine is a major wheat exporter. This conflict led to increased wheat prices, which, in turn, affected bread costs. “
Funny how no credit was given for the soft landing. Maybe a short term recession would been more acceptable? I doubt it though as the Dems got no credit for anything that they “accomplished.”
To be clear, this isn't a "blame Trump" thing! It's just that the "rocket" being landed was recovering from the Covid pandemic, and that obviously was "launched" when the pandemic started, which happened to be during Trump's term.
It's exceedingly obvious that the public largely blames the Dems for 2020. They were the party all in on the lockdowns. They were the ones rioting in the street.
Trump was president, but conditions on the ground largely depended on your state governor and a giant gulf opened up between blue and red states in 2020.
The bills passed with 100% bi partisan support before we had vaccines. It’s not like the dems opposed them. The bills under biden were party line affairs after vaccines.
Btw “cultural stuff” includes being able to leave your house, your school being open, muzzling toddlers faces, and being fired from your job over exercising bodily choice.
I am not passing value of whether or not the bills under Trump should have passed. I’m merely pointing out that Trump spent almost $6 trillion during Covid year and had won the largest budget deficit outside on World War II. We’re going to be honest about what caused inflation, we should be able to recognize the roots of it it.
the soft landing was some combination of brilliance and good luck. but while Noah can speak for himself, a soft landing was not on the ballot. and the 2 issues that were most visceral were immigration and the cost of living versus real wages and i think the Biden admin did poorly and messaged poorly on these two issues until it was too late.
The Dems have given us a *possibility* of not getting trounced by China when they move on Taiwan on/after '27. CHIPS, Infrastructure, IRA--all accomplished over fierce GOP opposition.
This thread is about soft landing. Also, several trillion needs to be a number, not hyperbole. Passing a bill doesn’t equate to results. 40 billion has been allocated for rural broadband connectivity. Do you know how many connections have been made? Zero.
Let's put it this way: without the more than $2 trillion in spending from IRA, CHIPS, & Infrastructure, do you honestly think the economy would be as strong as it is?
And regarding your broadband point: it's the economic activity that matters to the economy, not the number of actual connections. Tools, office rent, salaries, hardware, etc.
Powell should be getting blamed. He changed the Fed framework to take into account "average inflation" (FAIT) but when inflation started going over the average he didn't react for a year.
Monetary policy works on setting clear expectations. Powell set the expectation that instead of looking at the inflation number he would look at the price level. But when the time came to react according to this expectation he fumbled, convincing everyone he had no problem with high inflation for a while, just deflation. And here we are.
The stimulus. As we saw in the slow recovery from the great recession, there is nothing the fed can do when the economy is under-stimulated. Interest rates can only go so low. Yes, it went too far, but that wasn't knowable at the time (yes, it was predicted at the time, but whether that prediction was correct or incorrect was unknowable). Arguably, and I'd say this is pretty much what I think, the better way to do this would have been to still do the big stimulus, but with quicker aggressive fed action. They acted decisively once they acted, but they did wait quite a while to act.
The other thing the administration did was work on supply-side issues, which I think were a big part of the inflation story, just like the "team transitory" people always thought. I think the administration's efforts on this had less impact on this, because it's just not easy to do this sort of thing quickly. For example, by the time all the CHIPS and bipartisan infrastructure, and IRA initiatives started gaining steam, the inflationary period was mostly over. But those were still good initiatives.
I know that Economists disagree about this, but I think Sumner makes a very good argument that "there is nothing the fed can do when the economy is under-stimulated" is not true.
Anyone who doesn’t understand the difference between the root cause of the Great Recession and the shutdown driven pandemic recession should talk about something other than economics.
Solutions to different problems require different solutions. There's no similarity between the Great Recession and the Pandemic recession that's why those who over learned the lessons of 2009 made a mistake in 2021. People who are smart, like Larry Summers, knew otherwise.
I don't think that's what happened. Larry Summers was also wrong about what would happen. You can go back and look. He thought we needed to induce a recession with high unemployment to get to where we are today. I think the approach taken turned out to be qualitatively right, but quantitatively wrong. That is, I think the outcome demonstrates that we did the right thing, but overshot the right amount. That's not a bad model, it's just that the future is always uncertain.
I think the approach Summers was advocating for would have also lost this election, via recession rather than inflation. That's how it goes, it's not easy to get things just right.
Well, they’re about to get both with Trump
Yes, this is a sad irony. Let's call them "Trump's lumps".
The debate over the future of Democrats is almost settled with neoliberal elites actually prevaling even more than they did in 2016.
The argument is mainly this: Biden caused inflation by pursuing the expansion of the welfare state and this loss is therefore self-inflicted and caused by progressive ideas.
The neoliberals overemphasize government spending and wage increases as causes for inflation, while they minimize supply chain issues, agricultural prices, corporate profits and the cascading effects of increases in federal interest rates on things like mortgages, auto loans and credit cards.
Who is right? More than half of inflation had nothing to do with government spending or wages. The Federal Reserve has said so many times.
The argument is wrong not only regarding the causes of inflation, but also regarding the supposed expansion of the welfare state.
Trump expanded the welfare state (due to Congressional Democrats) and was rewarded for it:
1. Created Pandemic Business Assistance (that won't be repayed);
2. For the first time actual small businesses were eligible for government help;
3. For the time time self-employed persons were eligible for either business assistance or unemployment insurance;
4. Expanded Unemployment insurance, for the first time created standard national/federal benefits;
5. Expanded Medicaid eligibility;
6. Gave out free vaccines and tests;
7. Expanded Obamacare eligibility and subsidies;
8. Expanded SNAP (food stamps) eligibility;
9. Improved SNAP (food stamps) benefits;
10. Sent out several Univeral Basic Income checks, first time that more than one check is issued (and they were issued directly to people instead of reducing taxes like Obama);
11. Established national Eviction Moratorium;
12. Expanded federal housing spending;
13. Expanded federal spending on childcare;
14. Expanded the Child Tax Credit;
15. Subsidized state and local budgets.
Under Biden basically all of this was rolled back.
What Biden did was fund Industrial Policy.
He allowed 2 years to be wasted with idiotic negotiations with Sinema and Manchin. Both him and progressives are responsible for not wrapping up those negotiations as soon as it was clear that the "moderates" were negotiating in bad faith.
Yes there were substantive mistakes on some add on policies, like the ill designed electric vehicle incentive that can basically only be used by the upper middle class.
But Biden didn't achieve his proposed expansion of the welfare state. Not a single new benefit for ordinary people was created under Biden.
Trump and Republicans were incredibly smart in learning from the mistakes of Obama and the Great Recession.
It was Trump who spent and spent and Biden who cut and cut.
Republicans and Trump also made sure that as soon as Biden came into office all the benefits would start to expire.
What neoliberals are trying to do is rewrite history (again).
Neoliberal elites have almost no experience of the actual real economy, much less any lived experience of the welfare state as it actually works.
They cherry pick macroeconomic data like unemployment, GDP and the stock market, while downplaying consumer debt, auto loan purchases and defaults and the effects of interest rate rises on housing affordability and construction.
This is not done merely because of ignorance. They defend their class interests and the interests of economic actors they identify with and are funded by.
We now have a large coterie of mainly white male writers gaslighting Democrats about the state of the economy and misleading about economic and policy history while still claiming to be economic progressives.
“ white male writers gaslighting” is a great example of why Democrats lost and progressivism got rejected around the country.
As far as you’re argument goes, I think it’s important to point out that Biden try to keep the expanded well for state and he just didn’t have the votes. It’s also clear that the additional spending did add 2-3 points to inflation. Could Harris have one if inflation only paid that 6% instead of 9%? I don’t know. But it didn’t help.
You also really didn’t grapple with the key pieces of this article: that voters hate inflation more than they hate unemployment.
How do real wages today compare to real wages January 2021? I realize they fell in 2021-part of 2022, but has that ground been made up?
Wages mostly have, but people still remember the lower prices and have not adjusted to the new norm. Other costs, such as housing, still remain too high
Thanks. My prior on this is that the low interest rate low inflation economy for the past 20 years or so has been great for the stock market and wealthy people but has widened inequality and not been great for the working class/middle income people (or poor people.) Some of the 2021-2022 inflation was Covid-specific/supply chain-related, etc. And some was caused by a generous Covid recovery bill that mostly helped middle income and lower as well as significant wage gains in the lower to middle income range. Rising wages for the bottom half of wage earners is, all else being equal, inflationary.
But if inflation is politically toxic, what alternatives do we have to provide support to poor people and lower earners that won’t also cause inflation to move higher? I realize not everyone shares my goals, but we progressives need to figure this out.
1. Targeted help to people who need it
2. Fixing supply side issues to reduce prices (building more housing, hiring more docs, breaking up monopolies)
3. You can run the economy hot. To a point. Harris probs would have been ok if inflation peaked at 4%. I don’t know what the line is for inflation, but it’s there!
Real wages don't matter politically, its nominal wages, people just look at the sticker price and compare to 4 yrs ago
In that case, Harris should have done well on the economy- nominal wages have increased significantly the past 4 years.
Nominal wages are also higher and have grown faster than inflation since 2023.
It’s mostly people are still feeling sticker shock
Thats what I mean people want their new salaries with old prices
I identify more with white male workers who voted against Democrats due to inflation than with white male writers who talk about inflation as a way to move Democrats back to fake centrism.
Under the guise of saying that the welfare expansion should be paid for in the future, the real argument is that the welfare state can't be expanded because you need to convince upper middle class Democrats to raise taxes on themselves.
The underlying argument is that soak the rich is not enough nor correct. These writers know about the tax ballots in blue states failing.
Their recipe is therefore nothing more than the status quo.
Given that these writers also support mass immigration except they admit it is politically unpalatable and they oppose tariffs and support globalization, it is clear to me that these writers are in no way economic progressives. These ideas come straight out of a libertarian playbook.
Democrats overwhelmingly one upper middle class individuals. The reduction of Democrats last Tuesday was by people who make less than $50,000 a years.
You’re doing all of this mental contortion with the reality as is simple: Americans overly dislike inflation, more than unemployment.
Voters seem to also not really care that much about welfare expansion . at some point you need to recognize reality
Who do you think received the Covid checks and appreciated them the most?
Who do you think received the almost $10 grand in self-employment PUA and needed it most?
46 million individuals received unemployment payments in 2020, representing 1 out of every 4 workers.
Your responses prove my point.
Americans may dislike inflation, but that is not the whole story.
https://files.consumerfinance.gov/f/documents/cfbp_making-ends-meet-survey-insights_report_2021-12.pdf
Summary: Despite a massive increase in unemployment starting in March 2020, consumers’ average financial situation improved in the first several months of the pandemic and continued to improve through June 2021. We find that pandemic assistance policies such as expanded unemployment insurance and loan flexibilities are responsible for many of these improvements. Most pandemic polices—including extended unemployment insurance, eviction moratoria, and mortgage and student loan flexibilities—have recently ended or will end soon. Our results suggest these programs helped protect consumers during the pandemic, so their expiration may lead to increased consumer distress unless the economic recovery is strong and equitable enough to make up for the loss of protections.
It is also next to irrelevant moving forward as most inflation was caused by supply chain issues very specific to Covid.
You have almost every “fact” wrong and backwards. What the heck are you talking about and where do you get your information?
So let me get this straight. You feel that Biden inherited a great economy with no large debt created by Trump. Is that what you’re alleging
Noooo! I mean Trump's tariffs will cause more inflation and probably greater unemployment.
Maybe this will come up in the next post about out of touch elites. But, Americsns don't care about inflation. They care about prices. Inflation going down does not mean that bread, milk and eggs are cheaper. The economic model does not reflect the lived experience of the economy . And elites have chosen the model over the lived experience.
This is both true but it's kind of circular IMO. Americans care about price levels, yes, but you can't remove the time component entirely, and once there is a time component, you're back to talking about inflation.
For instance, nobody cares that we can no longer get a shave and a haircut for two bits. That is, nobody is mad that price levels aren't where they were in the 1930s. But people do care that they aren't where they were at the end of the 2010s.
So yeah, the typical yearly or annualized inflation rate is too short. Saying "inflation has been on target over the last year" is meaningless to people who are thinking about it over some longer timescale. But what *is* the important timescale? I'm confident in saying that it's more than a year and less than a hundred years... From an electoral standpoint it might simply be "since the last time power changed hands". Or (more frustratingly) it might be "since the last election year", having seen this weird phenomenon where Biden got associated with stuff that happened in 2020 despite not being president until 2021. Or maybe it really isn't quite so political, maybe it really is more like a fixed amount of time that feels "recent" to people, like 3 or 5 or 7 years.
I'd be interested in seeing how well the inflation rate over different time ranges correlates with different sentiment measures.
Speaking only from anecdotal personal experience, I think people have an anchoring bias with tolerable price levels, and they usually anchor to where prices were at the point that they start budgeting carefully, typically in early adulthood (late 20s and 30s). My grandparents actually DID used to balk that prices weren’t where they were in the 60s. My dad marvels that things aren’t what they were in the 90s. And for my part I do occasionally feel sticker shock by where things are in 2024 vs where they were last decade.
And I think on a basic level people feel that as they work hard and build more wealth, prices should stay largely the same so they can benefit from their wages increasing due to their experience and productivity. Rising prices, even if they accrue to a net increase in real wages, psychologically make people feel poorer. Frankly most Americans lack the economic sophistication to appreciate the claim that everything being 5% more expensive is fine if they make 10% more money.
And remember that most voters had never seen significant inflation - how many voters were actually doing any serious spending/budgeting in 1980. Definitely some, but I am quite sure it is far from most.
It also significantly raises the mental load of evaluating how good a deal something is. Even if you appreciate what a "real" wage is and can compare your nominal income to the CPI, evaluating *relative* prices is difficult when all the nominal prices are going up, and at different rates.
People like to make long-practiced things automatic, but this aspect of inflation defeats automaticity and requires a lot of thought. Which is really annoying!
This hasn't been my experience, but your mileage may vary I guess!
No one seems to be talking about this, but the most shocking fact about the recent election is that 12 million Biden voters from 2020 stayed home in 2024. I think anger over inflation had a lot to do with this.
I invite you to read "Vanished into thin air: Where did 12 million Democratic voters go?"
https://kathleenweber.substack.com/p/vanished-into-thin-air-where-did
California is gigantic and counts votes incredibly, incredibly slowly. They're slow at everything election-related, even slower to release post-election voter files. (Last I had to work with one I recall it being out the following August.)
So that 12 million figure will go down a lot in the next few weeks, though I couldn't say how much.
I was assuming that these figures were educated guesses about the final vote totals based on the fact that the West Coast states tend to count so slowly.
The voters weren't there in 2024, because they were at work or busy. 2020 was Covid and people had less work obligations. They were freed up to vote. 2020 was the anomalous year.
And even with that extra 15 M voters, Biden barely eked out a win of maybe 170 k votes across swing states. His win was miniscule. 2024 is back to Earth in a center-right country.
Inflation is to voter experience what theoretical physics is to bridge construction, connected but not relevant. Nobody chooses an engineer by quizzing her on physics. The academy's need for certainty and equations has caused us to forget that all of modern economics should come with a disclaimer that says " this works only if humans are Vulcans and always do the logical thing. An hour economics relevant to life on Earth is just too unsatisfying'
Did you... read my post?
Inflation is not a complicated theoretical construct, it is just "how much has the price level changed over some time period".
My point is that there is no such thing as caring about "price level" with no associated "time period".
Nobody cares whether we can currently get more or less wheat for a fixed amount of gold compared with the ancient Romans. People care whether they are paying more for things than they were "recently". But "recently" is a time period, so this is once again a question of inflation.
You can instead look at things that really do cancel out the time component, like income to expense ratio, both in real terms. But I think this is misleading, because people do see, and thus care about, their spending at the nominal price level.
I did read it and we are doing n complete agreement related to our irrelevant opinions about how inflation works and where the point of misunderstanding is. Where we differ is at the point of whether the conversation is relevant or not to this or any other election. I am willing to bet that you agree with me that the worst possible way to bring prices down is to have government mandate that they go down. As horrible as that policy has been historically, if I were Ukraninan or Taiwanese today, I would have prayed that Biden had done it. That would have addressed the fury of the awakened electorate and Ukraine wouldn't be about to lose the war and Taiwan wouldn't be for sale.
What you're saying is basically that voters averaged the inflation rate we experience 2020 to 2024 and that was their evaluation of Biden.
Dems wanted them to simply ask what inflation was Nov 2024, or what second derivitive was within the last twelve months, or whatever cherry picked data point they wanted.
1) Dems shut down the economy over COVID
2) Dems passed a bunch of massive spending bills on party line votes to pay for that
3) The overall inflation rate over the last four years was bad as a result
That's a completely accurate picture to tell. People aren't going to give you credit for partially fixing the mess you caused (and did they even fix it, seems more like they just waited till it went away on its own).
Lastly, inflation is lower then two years ago, but core inflation is still pretty high relative to the pre-2020 norm and long rates aren't coming down.
The tragicomic thing is that you're completely convinced of this narrative blaming Democrats, while #1 and #2 both happened during the Trump administration.
Eh, I think you can point to the actions of Democrat-controlled states (e.g. California, where I spent 2020) and lump those in with "Democratic governance". There's a reason why lots of fallout from Covid policy didn't "stick" to Trump.
This narrative that blue states and red states responded significantly differently to Covid is very overblown. The spring / summer 2020 shutdowns and the resulting unemployment and other major disruptions all happened at the national level. Even schools - the area where I think the red blue differential was most damaging - reopened in red and blue states within a few months of each other.
You're right that there is a reason this stuff didn't stick to Trump. But the reason is that he is a liar and his lies are supported by the entire right wing media ecosystem in lockstep.
Actually core inflation is fairly solid at 2% - and pre 2020 was a long stretch of relatively low inflation as the aftermath of the 2008 crash (which was caused by the Republicans).
And it is very clear that the supply chain issues (transitory) played a significant role in inflation - the way it came down without massive unemployment is a sure sign of supply side rather than demand side inflation
This is it right here.
Everyone remembers what prices used to be, and even if they understand cumulative inflation rationally, they feel the prices emotionally.
When you talk to older folks about money, it’s like entering a time warp: I’m thinking about Grandpa Simpson. “Now, to take the ferry cost a nickel, and in those days, nickels had pictures of bumblebees on 'em. "Gimme five bees for a quarter," you'd say.”
Covid and the high inflation of the 2020s sped up economic time. The “dollar menu” is dying like the nickel & dime stores of old. That was supposed to happen gradually, but it happened suddenly.
I think they care about both, both P and Pdot. It depends on how rapidly different prices are rising, and how some prices (especially energy) fall back, while others (like the price of eggs) remain stubbornly high.
Also, there are times when unemployment does matter to people a lot more. But Noah's argument, that inflation is diffuse and nearly universal, while unemployment is concentrated, is definitely correct. And unemployment is concentrated by industry, class, geography, and in time as well -- meaning, concentrated in recessionary periods. We saw that too in the 1970s, in the 1974-75 and 1980-82 recessions.
The price of eggs will never go down, but wages are going up so that eggs are affordable again.
The problem is that people feel the higher prices more strongly than the higher wages, even if they mathematically offset.
"The problem is that people feel..." Is the motto of that part of the Dem leadership that needs to take a seat.
Thankfully, yes. The elites went over the myopic perspective of lived experience for doing the right thing. It just sucks that it had an electoral cost, but in all non-electoral aspects _that was the right thing to do_.
There's probably a lot of truth to this.
Looking back at US history, I don't think the lesson is that Americans are allergic to hardship, I think the lesson is that you need to lead them through it. Biden was a good steward of the economy, but if his administration knew that inflation was coming, they needed to TALK about it. They needed to be up front that this was coming, and that it would hurt and he was sorry it would hurt, but it was the best way to get their neighbors back to work, and the best way to secure a good future for their children. He needed to lead, and instead he left the leading to any jerk with a microphone.
I will give Trump credit for one thing: he leads. He leads us to dark, awful places that future generations will curse us for, but he leads, and that matters.
When NYT announced in '21 that Unilever and Proctor & Gamble--both very large multinationals with oligopoly-level market share--were raising their prices ~15% *over* their cost basis pricing, I realized that Biden needed to immediately shame them for their greed from the bully pulpit. Shame them for gouging consumers in a very difficult time. But he was too pro-business to do so. And the rest is history.
Harris picked up that thread in her brief campaign. But it was too little, too late.
Well, when she talked about anti price gouging efforts, they simply called her a socialist.... Large Corporations have realized that they can do whatever they want, and voters will simply blame the President instead of changing their consumer buying habits. Americans want to consume, and capitalism rarely punishes the people winning at capitalism, it usually just punishes the person in charge of the government and voters themselves.
Oh yeah. Large corporations just learned that they have veto power over Presidential reelection campaigns.
I think there is a lot of truth to this. I can't think of a positive way to spin this, but a lot of this "leading through hardship" seems to require deflecting the blame for the hardship away from your own administration.
I think it's very interesting that Trump ended up being essentially not blamed at all for the truly miserable "hard-pandemic" year of 2020, while Biden did take the blame for the somewhat less miserable but still sucky "soft-pandemic" years of 2021 and 2022 (and some of 2023 maybe).
Some of this may be rational or sensible by first principles; it does make some sense IMO to think of the pandemic like a natural disaster, which sure, a leader can make worse or better on the margins, but fundamentally it is not their fault that it happened. I tend to think the shitty recovery years were just as much a part of the natural disaster as 2020 itself, but I can see why a lot of people saw a more direct through-line to a lot of those problems having been caused by the response itself. (I just think the problems of a much lesser response would have likely been a lot worse.)
But I also do wonder if Trump's just general shittiness as a person relative to Biden helped him here. Maybe he was just better at deflecting blame that he deserved than Biden was. And maybe deflecting blame is more of an important leadership skill than I want to think of it as being.
I'm not sure that's the only way to do it. I think the likes of FDR were up-front about it, and won repeatedly. It wasn't just warning people, it was assuring them that there was a plan and it would be worth it. If Biden - or even Harris herself - had been out front and taken their lumps but acknowledged how people were hurting and promised to do everything they could to make it better, I think they would have won.
The myth of Trump is that everything he does is on purpose, toward some master plan[1]. Whatever else he does, he talks, and he seizes on everything he can possibly take credit for, in a way that Democrats seem to feel is beneath them or unseemly or something.
That said, I'm not convinced it helped him that much this year. I think any other Republican candidate would have completely blown Biden or Harris out of the water, purely by virtue of not being Biden or Harris. Haley and that Florida schmuck are too-good politicians to have expended political capital running in the primary against the center of the GOP personality cult, if they thought there was a serious chance of losing in the general. I think it was only as close as it was because Trump sucks so much. I don't think he did evade blame, so much as just, he's not who Americans were mad at right now.
[1] The truth is that he's an incurious, venal narcissist with the attention span of a kitten on cocaine, but that's another matter.
Yeah but FDR came in by booting out the guy who got the blame for causing the depression... So yes, you can avoid this problem by being the person elected to fix a problem someone else is perceived as having caused.
But I'm not sure this is an optimistic story for us, with respect to Trump coming into office. I'd say there's a pretty good chance he's going to cause a bunch more inflation and successfully blame it on Biden anyway.
And the voters will believe it... Look at the UK, they are already blaming the new Labour Government on the issues caused by Tories over a decade. Voters want quick fixes to problems and are extremely biased in most cases. Seeing people that don't even own stock and now celebrating the stock market and economy just because Trump got elected is happening right now.
Oh it’s definitely not an optimistic story for us. The next four years are gonna SUCK. And I’m very worried about who comes after Trump. The Democrats aren’t immune to Trumpism, it just needs to come from someone who isn’t Trump. (If you’re a Transmetropolitan fan: after the Beast came the Smiler)
I expect Democrats to make large gains in 2026. Trump will overplay his hand and Republicans don't show up when Trump isn't on the ballot.
I completely agree and think this was why Biden adopting the transitory inflation stance was so incredibly harmful to him. Had admitted that inflation was a huge issues and that it was something he was working to address as quickly as possible I think people would have been a lot more forgiving. Tell them it was transitory was seen as a BS excuse, with the implication that nothing needed to be done as it would go away.
Biden is too much of an old-school Senator.
As a Senator, he worked behind the scenes so that everyone could take credit back home. He would work with guys like Strom Thurmond because he never had to run against Strom Thurmond. You don't humiliate a fellow Senator because you might need their vote tomorrow.
That doesn't work in 2020s national politics.
> I think it's very interesting that Trump ended up being essentially not blamed at all for the truly miserable "hard-pandemic" year of 2020
I don't think that's necessarily accurate, he did lose in 2020 mostly because of how 2020 went. The issue is that voters didn't feel like giving Biden a shot really improved things.
Yeah fair enough. But at this point nobody talks about that anymore. It was not an issue in this campaign, for instance.
I believe that Trump was cruising to reelection before the pandemic, because the 2017-19 economy was really good. Voters gave him the second term they would have given him if not for the pandemic.
Second, the economic effects of the pandemic lasted long after people stopped caring about the virus itself. That's kind of a hard thing to explain to people. A series of fireside chats about where we were and what we were doing would have helped a lot.
I believe Biden did a good job, but was an extremely poor communicator about what the American people should expect and what he had done for them. By the time Harris took the lead, it was too late.
Deflecting blame is a red flag among people who understand leadership, but not among the general public. The gap between how engaged voters see the world and how disengaged voters see the world played a big role in how Trump got re-elected. This is also why Democrats have been doing much better in low turnout elections when Trump isn't on the ballot.
Hard to disagree with much of this!
I'm not so sure Trump was cruising to re-election though. I think there's quite a bit of asymmetry between how much people reward presidents for a good economy vs. blame them for a bad one. I only remember people talking about how amazing the 2019 economy was in hindsight, essentially after Biden was elected. People didn't talk about it being bad, I just recall it being treated more like an inevitable permanent thing; “of course the economy is good with low inflation, low unemployment, and zero interest rates, this is America, duh”.
And I think it's easy to underplay after all the economic turmoil and international conflict, that in Trump's pre-pandemic “good ol’ days” that everyone was already sick of his bullshit. (I think lots of people are going to suddenly remember that here in a few months…)
But sure, I think the pandemic made it easier for Biden to win, and he still didn't win by much. But I think without the pandemic, we might have just seen a low-turnout snoozer with the same narrow result.
But I think this is also points to underlying fundamental issue with Joe Biden: he seems to be too old to be an effective communicator. The biggest thing that has hurt by the administration is that he was always just too slow and quiet to communicate anything.
Strong and wrong beats timid and cautious every time.
This is 2004 all over again. George W. Bush was resolute in his bad ideas, while Kerry was tarred as a flip-flopper.
Very good point.
I do find it morbidly hilarious that Donald Trump will inherit two great economies from Democratic predecessors and get credit for both
Right? Dude has been so incredibly lucky in politics for the past 8 years. It's almost supernatural. Part of me is terrified about what he will do to the economy; the other part of me wonders if his unparalleled streak of dumb luck continues and somehow the economy thrives despite his best efforts to ruin it.
I think in this particular bout of inflation the thing that differentiates it from other inflationary periods is food prices. The price of eggs more than doubled in dollar terms from 2021-2022. Bread increased 36% over 4 years.
And here is chicken breast.
https://fred.stlouisfed.org/series/APU0000FF1101
Economists should really differentiate between essential goods like food with no, or difficult, substitutions and the rest.
Although increases in food overall were more modest than these three items it was high enough at more than 23% over Biden’s term.
There is a problem in how we measure the impact here. The cpi is calculated by averaging a basket of goods relative to median income. Food is 11% of the basket, as this is what the median income earner spends on food.
So the median income earner sees a bit of a jump in his cost of living. Perhaps his wages have somewhat compensated (although from the graphs we see it hasn’t fully). And he can substitute the more expensive free range egg with the ordinary egg.
The lower you go down the earnings ladder the more the relative cost of food is. The bottom quintile spend 32% on food, including eating out - but that’s only 10% of the total spend. There’s no real substitution for low earners as they are probably buying as cheap as possible anyway, and this kind of increase becomes pretty noticeable.
(Fast food prices have also increased past inflation, for whatever reason, in the last decade and poorer people often do use fast food when unable to cook, but it’s less of an option now).
This is balanced a bit by a larger increase in wages at the bottom quintile over the term but I still think the food prices are very noticeable to the poor, and a statistic to the rest.
I'd also note that if you locked in a 3% mortgage rate/owned your home before 2020, you exist in essentially a different universe than anyone that didn't. Becoming a new homeowner is practically impossible.
Don't forget that low interest rates after 2008 were due to a financial crisis, where the Fed acted to stimulate the economy with abnormally low interest rates for a long time.
And, what is important to note, is that food and commodity prices increased around the world, not just in the US.
Just look at the FAO worldwide food price index. https://www.fao.org/worldfoodsituation/foodpricesindex/en/
Noah should ask himself: Did you eat more, driving up the demand for food, when you received a stimulus check? Do you believe that food commodities are not traded in international market?
As for regular inflation statistics, you only have to turn to the Federal Reserve statitistics of manufacturing capacity utilization to find that manufacturing capacity utilization was not strained during this period....In fact, unlike other inflationary periods...it tracked non-inflationary periods. https://fred.stlouisfed.org/series/TCU I will admit that utilization dropped dramatically during covid, and following it, firms did increase capacity utilization, but not at the levels associated with prior inflation. Just look at the data on capacity utilization over time. Not indicative of excess demand straining capacity.
We need better economic reporting.
Food is a little different from inflation seen globally because:
1) the US produces about 20% of the world's food and is a leading exporter...so if the US has inflation in food prices, it is a big enough player that the world will likely have it as well.
2) Two of the other major food suppliers - the Ukraine and Russia, had a war...impacting their ability to produce and distribute food.
The second is important because of all the commodities impacted by the war...Food was the probably the biggest.
I read something perceptive (I thought it was Noah but it must have been another writer) that economists care about "core inflation", stripping out food and energy prices, while every working class person cares about "non-core inflation", i.e. only food and energy prices.
Any idea on causes? Will have to research.
ChatGPT says “Eggs:
The price of eggs has been on a wild ride, with a significant surge due to the outbreak of Highly Pathogenic Avian Influenza (HPAI), commonly known as bird flu. This nasty virus led to the culling of millions of egg-laying hens, drastically reducing supply. In September 2024, the average cost of a dozen Grade A large eggs was $3.82, marking a 39.6% increase from the previous year. 
Chicken:
Chicken prices didn’t escape the turmoil either. The same avian flu that affected egg production also hit poultry farms, leading to a decrease in chicken supply. Coupled with increased feed costs and supply chain disruptions, consumers felt the pinch at the checkout. For instance, ground beef saw a 32% rise, with the lowest cattle numbers since 1951 due to drought and high supply costs. 
Bread:
Bread prices rose due to a combination of factors. The pandemic disrupted supply chains, leading to higher costs for ingredients and transportation. Additionally, the Russian invasion of Ukraine in 2022 impacted global wheat supplies, as Ukraine is a major wheat exporter. This conflict led to increased wheat prices, which, in turn, affected bread costs. “
Funny how no credit was given for the soft landing. Maybe a short term recession would been more acceptable? I doubt it though as the Dems got no credit for anything that they “accomplished.”
Nope, no credit for "soft landing" when you're the ones who were in charge when the rocket was launched.
They weren't though. The rocket was launched in the spring of 2020 when Trump was President.
To be clear, this isn't a "blame Trump" thing! It's just that the "rocket" being landed was recovering from the Covid pandemic, and that obviously was "launched" when the pandemic started, which happened to be during Trump's term.
It's exceedingly obvious that the public largely blames the Dems for 2020. They were the party all in on the lockdowns. They were the ones rioting in the street.
Trump was president, but conditions on the ground largely depended on your state governor and a giant gulf opened up between blue and red states in 2020.
That’s true for cultural stuff, but Trump did spend through trillion dollars in March 20 20 and another trillion dollars in December 2020
The bills passed with 100% bi partisan support before we had vaccines. It’s not like the dems opposed them. The bills under biden were party line affairs after vaccines.
Btw “cultural stuff” includes being able to leave your house, your school being open, muzzling toddlers faces, and being fired from your job over exercising bodily choice.
I am not passing value of whether or not the bills under Trump should have passed. I’m merely pointing out that Trump spent almost $6 trillion during Covid year and had won the largest budget deficit outside on World War II. We’re going to be honest about what caused inflation, we should be able to recognize the roots of it it.
* 3 trillion
Yes this is obvious. It's also idiotic.
"The rocket was launched in the spring of 2020 when Trump was President."
Do you write for the Bee?
https://babylonbee.com/news/trump-unveils-much-simpler-stimulus-plan-giant-money-cannon
the soft landing was some combination of brilliance and good luck. but while Noah can speak for himself, a soft landing was not on the ballot. and the 2 issues that were most visceral were immigration and the cost of living versus real wages and i think the Biden admin did poorly and messaged poorly on these two issues until it was too late.
The credit should go to Powell. What did the Biden administration do?
The Dems have given us a *possibility* of not getting trounced by China when they move on Taiwan on/after '27. CHIPS, Infrastructure, IRA--all accomplished over fierce GOP opposition.
Industrial policy = Dems. Tax cuts & (more) red ink = GOP.
Biden retained Powell. He didn't replace him. And let him do his thing.
Only the last one is relevant to the thread.
Since when doesn't several trillion dollars invested in manufacturing and infrastructure *not* produce substantial economic benefits?
This thread is about soft landing. Also, several trillion needs to be a number, not hyperbole. Passing a bill doesn’t equate to results. 40 billion has been allocated for rural broadband connectivity. Do you know how many connections have been made? Zero.
Let's put it this way: without the more than $2 trillion in spending from IRA, CHIPS, & Infrastructure, do you honestly think the economy would be as strong as it is?
And regarding your broadband point: it's the economic activity that matters to the economy, not the number of actual connections. Tools, office rent, salaries, hardware, etc.
Powell should be getting blamed. He changed the Fed framework to take into account "average inflation" (FAIT) but when inflation started going over the average he didn't react for a year.
Monetary policy works on setting clear expectations. Powell set the expectation that instead of looking at the inflation number he would look at the price level. But when the time came to react according to this expectation he fumbled, convincing everyone he had no problem with high inflation for a while, just deflation. And here we are.
Yep.
The stimulus. As we saw in the slow recovery from the great recession, there is nothing the fed can do when the economy is under-stimulated. Interest rates can only go so low. Yes, it went too far, but that wasn't knowable at the time (yes, it was predicted at the time, but whether that prediction was correct or incorrect was unknowable). Arguably, and I'd say this is pretty much what I think, the better way to do this would have been to still do the big stimulus, but with quicker aggressive fed action. They acted decisively once they acted, but they did wait quite a while to act.
The other thing the administration did was work on supply-side issues, which I think were a big part of the inflation story, just like the "team transitory" people always thought. I think the administration's efforts on this had less impact on this, because it's just not easy to do this sort of thing quickly. For example, by the time all the CHIPS and bipartisan infrastructure, and IRA initiatives started gaining steam, the inflationary period was mostly over. But those were still good initiatives.
I know that Economists disagree about this, but I think Sumner makes a very good argument that "there is nothing the fed can do when the economy is under-stimulated" is not true.
Once interest rates are at zero and they are doing "quantitative easing", what else can they do?
Anyone who doesn’t understand the difference between the root cause of the Great Recession and the shutdown driven pandemic recession should talk about something other than economics.
My comment isn't about the root cause of either thing? No idea what you're on about with this comment.
Solutions to different problems require different solutions. There's no similarity between the Great Recession and the Pandemic recession that's why those who over learned the lessons of 2009 made a mistake in 2021. People who are smart, like Larry Summers, knew otherwise.
I don't think that's what happened. Larry Summers was also wrong about what would happen. You can go back and look. He thought we needed to induce a recession with high unemployment to get to where we are today. I think the approach taken turned out to be qualitatively right, but quantitatively wrong. That is, I think the outcome demonstrates that we did the right thing, but overshot the right amount. That's not a bad model, it's just that the future is always uncertain.
I think the approach Summers was advocating for would have also lost this election, via recession rather than inflation. That's how it goes, it's not easy to get things just right.