Jul 31, 2023·edited Jul 31, 2023Liked by Noah Smith
Agree with your comments.
One area where we're not doing well and it's causing real pain is home/apt building. No one could credibly disagree with the observation that we have a real housing crisis. Yet that's exactly where the current economy is coming up most short. Home builder's can't build (because they can't sell) in volume. And apartment construction has fallen off a cliff owing to the doubling of debt costs combined with equity having run to the sidelines (I'm a large scale apartment developer.)
So just when we need a large supply boost, and the YIMBY movement is making real headway on the entitlements front, the factors required for a big housing supply increase have run into a head wall in the form of the current economy.
I came here to say exactly this. And also to note that the drop in Median sale price does not necessarily mean home prices are going down, it may also (or entirely) reflect the mix of homes being sold.
Supporting Noah's comments about how the upper-middle feels, I believe that many feel trapped in their homes - with their home buying/upgrading plans frozen because homes and the debt to buy them are too damn expensive... See Bruce's comments.
"And also to note that the drop in Median sale price does not necessarily mean home prices are going down, it may also (or entirely) reflect the mix of homes being sold."
Typically, high end markets take a lot longer to drop than lower end. Instead, the sales just dry up. This is because high end sellers are not forced to sell as much as lower end sellers, so there continues to be a market at the lower end which changes the mix skewing lower.
Do you have a source for home builders not being able to sell? I would've guessed that home builders are selling even more now since home owners aren't willing to sell due to their locked in mortgage rates. Therefore, home builders are making up a larger % of home sells and coming out net ahead.
"Home builder's can't build (because they can't sell) in volume."
If there is such high demand - and there is in a number of areas of the country, how can this be true, unless the building costs (land, materials, labor, misc.) exceed what the demand is capable of paying (taking into account borrowing costs)? Is there an overabundance of brand new homes/condos/apartments sitting empty and unsold/rented out there?
Good points. I think the missing piece here is theres plenty of affordable homes they are just too small or in areas people don't want to live. There may be a shortage of relevant workers too- not enough construction workers in comparison with desk jobs.
As to your last point, I'm having a fancy pants storage shed built on our property. Took me a few years to find someone to do it since is a small job compared with building a house or large remodel. The crew I was finally able to hire a few weeks ago speak no English, but the google translation app solves a lot of problems, and my bits and pieces of school years Spanish is all coming back to me. And, they seem to be good builders for basic framing, siding, roof, doors and windows, wherever they learned their skills (these guys are in their 20s).
I'm not sure it is more on point when Joshua literally wrote "construction" — but in any case, even the starts numbers you link are higher than they were in every month from 1989 through 2018 except for June 2015!
Would seem like progress being made on this front but Americans still by and large want to live in low density housing and that's always going to create tremendous upward pressure on housing prices. Maybe over time these norms change as millenials get priced out of single family homes.
I remember when my credit card rate was 21% (early 90's) and mortgage rates 8%. The thing is that they aren't static. The rates go up and go down. If fewer people take out mortgages, banks will lower the rates.
“If people take out fewer mortgages, banks will lower rates.” - This simply isn’t true. Mortgages have to both be profitable (I.e. charge more interest than banks pay depositors) and pay something competitive to other places banks can lend (government treasuries, corporate bonds, etc.). Demand for mortgages has very little affect on market interest rates.
I think this misses an important point, which is that while INFLATION has gone down, PRICES haven't. Now, I know: inflation going down doesn't mean prices go down. Prices going down would be DEFLATION, and that's bad. Yes yes yes. But most people don't get this. For most people, inflation means "My groceries cost 15% more than they did two years ago!" And groceries still cost 15% more than they did two years ago. So inflation hasn't gone away. Again, I'm not endorsing that thought process, I'm just saying it's very common.
Sure. But if real purchasing power is higher than before, then it means that people's paychecks go farther under the new prices than under the old prices.
Handing out 15 pct of GDP between Dec 2020 and Mar 2021 in an economy whose supply the government was constricting and generating more inflation than real growth was those handouts was truly a genius move
A bit of inflation for everyone is much easier to recover from than unemployment for some fractions of the population. Of course, the latter is much easier for most people to ignore.
I still think the helicopter drop in 2021 should have been more focused on Americans with less savings. An easy way to have made it more focused on people with less in the bank would have been to do a $1 trillion reparations package that would have sent dollars to Native Americans and descendants of American slaves which are two groups of Americans with very little savings.
Yes. But groceries are still 15% more expensive, and that feels bad. Again: I'm not saying this is RATIONAL. I'm saying that this is what people are actually complaining about.
Yeah, when I see people talking on Reddit or Threads or X it is always "chicken breasts cost how much!?" and "fast food at Arby's is $21 now!?"
See this reddit post from today as just one of many many examples in the genre:
"How are people even affording groceries right now?
Tip/advice 💁♀️
Everything has gotten so freaking expensive. I find myself going to three different stores just to try to get decent prices. Meat/chicken is the only thing I “splurge” on anymore - as I’m buying from hyvee or Kroger instead of Walmart.
I feel like I am spending 70-100 for just me a week. And then I always have a few meals of eating out a week.
I read that and posted in it. First of all, I always went to a few different stores to save money. There is a tool called a price book I always used (or can just use an app for it too I guess but everyone's price book will vary depending on what they eat/keep in the pantry). Anyhow, I don't need to use it much anymore because week after week, the items/best prices become memorized/second nature. I almost always buy loss leaders in the quantity possible and necessary for the next sale and produce according to season. The prices at some places are very high (like Wegmans). I also utilize a food buying coop to keep my budget down. I feel some places will have higher prices so long as they can get away with it and it is up to the consumer to let their wallet go walking and allow them to either adjust their prices or go out of business.
It’s totally rational. People are still poorer after a major inflationary event until their wages catch up with the inflation (which is still continuing albeit abated). That wages start to grow again doesn’t mean that everything is back to normal.
I find actual price levels to be a lot more real, and the reaction to them more rational, than extrapolating people’s feelings from cherry-picked charts. But that is just me.
But, there is more going on there than just inflation.
The following comments invite correction. This is just what I've heard from the news.
Part of the increase in the cost of any chicken product is the bird flu. Producers had to destroy so many chickens that it had an influence on the cost and that cost will remain high until those chickens are replaced through new generations.
The weather and fires have destroyed so much land that also affects costs. Draughts affecting grain crops will affect flour and so bread prices will be higher.
Labor losses caused by migrants not being able to cross the borders will affect how much produce will be harvested before it spoils in the fields. The work is hard and Americans aren't lining up to do the work.
The Texas' war on Mexico destroyed the avocado market. (I love avocados).
The supply chains and what's happening globally will affect food costs in the cold months as well.
I think this is why there is a lag effect. People are mad about how expensive eggs are now. As inflation moderates, they'll get used to the fact that eggs cost $Y now and tend to forget that they used to cost $X a couple years back.
This is why I don't think it matters for Biden what people think about the economy *right now.* It only matters what they think in Nov 2024.
Where are the raises? Instead, folks are going to see pay cuts due to increasing taxes, inflation (another tax) and job loses. You’re looking at the past. Look over the horizon. Commercial real estate, escalating job loss, tightening of bank loans, and increasing criminal behavior. San Francisco a prime example.
This comment is almost the definition of vibes vs reality. Sadly, part of our negative polarization has lead to people wishcasting for the worst possible economic outcomes. That more than anything else is probably driving the narrative.
Real wages are rising which is very straightforward. Employees receive salary/wage increases greater than increases in prices. Wasn't this way earlier when inflation was +9% and even higher. However, it's that way now. Plus, if an employee adapts to, say, become proficient at using AI, not even programming it, that employee's labor is much more valuable and she'll get paid even more.
Violent never went up in the first place and is still below 2019 levels and low compared to similar cities. Property crime has remained the same (high compared to other similar sized cities).
But who is responsible for crime in big cities. Generally the mayor. But the biggest cause of crime, seems to me, is two things: illegal addictive drugs and a proliferation of guns of all kinds. While drug smuggling could rest with lax laws promoted by Democrats, the gun problem sits squarely in the Republican camp.
That means the median person's paycheck is going farther. By definition one half of the people are doing worse than the median. And almost all of them have the right to vote.
I often write succinctly and choose to leave out nuances, but I think we need an economy that works for more than 60% of the people. The bottom 25% of America is really suffering.
Let's assume that you are correct. In that case, the American lower classes are moving from a super awful experience to a very awful experience. If your annual income is $10,000 dollars, a 25% raise brings you up to $12,500. If your annual income is $15,000 dollars, a 25% increase doesn't get you to $20,000.
I consistently find that well educated people with numeracy, the kind of people who read this blog, who almost always have well paying jobs, simply cannot understand what it means to be poor. And, unfortunately that includes Noah. His focus is on the median. But there are two wings off the median— the wealthy who don't need our concern, and the poor who don't receive it.
I had a friend who was living on a $700 disability check + $180 In food stamps. Then they reduced his food stamp allowance to $80, because he started receiving Medicaid. He was recovering from cancer. We both thought that eating food is an important part of recovering from cancer.
You have to grant that the initial inflation period ate their entire wage increase, which kept them from falling back under the inflation but didn't give them any "breathing room". Landlords driving up rent costs ate whatever advantage they've gained in wage increases now. The housing market for investors is looking for greater profits and is making changes to the current housing stock that makes renting and housing purchases more expensive.
A car at much higher prices with a loan at double or triple the old interest rate? A 250,000 house with a 7 pct mortgage instead of 3 percent? Groceries?
Paychecks, yes, but (as indeed alluded to in your article), what about existing wealth? While mediated by a credit card because it's more convenient and offers more protections than cash, for all intents and purposes, I pay for groceries (and other purchases) out of my bank balance, not on credit - and inflation doesn't appear to have a uniformly positive effect on wealth held in equities (and obviously has a negative effect on the value of bonds other than, say, I-Bonds which are purchase-amount limited).
If you're accumulated assets, inflation would seem to have a high likelihood if being well approximated by "stuff costs more and you have the same amount of nominal dollars."
What percentage of people have seen their purchasing power go up though? Our expenses have inflated by significantly more than the CPI-U would indicate and our wages haven't kept up. That's not exactly surprising as CPI is not a real measure of any one person and we are somewhat higher on the income scale, but we have a huge advantage in that our housing costs have been more or less locked in with a low interest rate. The people at the lower end of the income spectrum who have had >5% annual wage increases I feel like are hit even worse by inflation. Anecdotes are not data, but it seems like more people are a little behind in purchasing power than not.
For people with financial assets that they keep up with fairly regularly, they maybe are being impacted by their drop in real wealth, which I think people tend to measure against the peak. Lots of people saw their wealth increase early through covid before the inflation hit, and even though the rise in asset value and inflation were mostly related and arguably should be seen as essentially happening at the same time, people feel like things were going well and they were "rich", and then inflation made them much poorer rather than thinking they were doing ok, then COVID spending drove a lot of paper wealth and also drove a lot of inflation that mostly netted out, and now they're still doing ok.
According to Atlanta Fed the median wage increase among the bottom 25% of workers (by income) and the next 25% of workers (so bottom half) is above inflation.
So we would think at least half of the bottom half had wage growth > inflation the last year, by a good amount.
Median wage growth in both quartiles since inflation started rising fast had kept up with prices.
So someone getting the median wage growth for low wage workers in 2020, 2021, 2022 and so far in 2023 has kept pace with inflation since 2020. Barely.
wages aren't keeping up with their monthly costs. They're not buying different stuff or getting better stuff it's just costing more for the same stuff. Think about replacing a tire. Think about the cost of air conditioning if you actually have it.
If the top 10% of earners earn as much as the bottom half of workers combined then -2% real wage growth for the top 1/10th can counter +2% real wage growth for the bottom half, etc.
Median wage growth for 0-25% (percentile, by income) and 25-50% of workers has exceeded inflation for a while. It's also matched inflation since the pandemic.
Median even of a smaller slice isn't everyone of course, your mileage may vary, but it is the median experience of just those workers.
Not according to the data I've read and is commonly reported. Those persons could leave their current roles and get hired elsewhere at higher rates most likely. Of all those you listed, how many do you know personally and know they've asked for higher pay? How many are union? I mean, if you don't ask, that's on the employee.
I wonder how much this is tied to the long extended period of quite low inflation (generally well below the 2% target). So, everyone got used to prices not changing much at all. So, when they went up, it was a bigger shock. Look at the inflation rate under Reagan in the 80s - noticeably higher on a regular basis than right now), but folks sort of got used to it.
And the price rises hit faster and quicker than wages going up. So, the period of unhappy dislocation.
Couple all that with the comments on upper middle class where the mindset is still that housing prices (and wealth) keep going up. Big burst in "housing wealth" in the last 5 years before now
Good observation. It's as if we experienced ~30 years of inflation in ~3 years or feels that way rather. Of course, that low inflation rate for much of the ~30 years was due to globalization which isn't entirely dead while it's pretty close.
Globalization isn't dead at all but it isn't expanding at the rate it had been. A very high proportion of our consumer products still come from overseas. That isn't globalization I don't know what is.
Given the threat China poses the USA as it seems every authoritarian regime with a modicum of power becomes, having them make consumer products as we move manufacturing to the USA and friendly countries, makes a lot of sense to me. I'm nearly certain, if I had to guess, that's the strategy in order not to decimate their economy built up these past ~30 years through globalization quickly; have them create non-geostrategically critical things such as consumer products and we'll create the geostrategically-for-national-security things here and at friendly countries. Hope it's enough to sate Xi for the time being, allow them to stand on their own and increase their domestic consumption, serve it as a sort of developed country. "Sort of" because I think we forget just how many persons in China live on poverty level incomes.
I've been looking and all the household goods that are in my house now were made in China. You have to really work hard not to replace household goods with something that is not made in China and don't count on Amazon to tell you where something was made.
I suggest you read Janet Yellen's comments in China on the issue of globalization (although she does not use the term.
She acknowledges that globalization defined as every country on Earth sourcing widely, and no one depending completely on home manufacture, is here to stay.
In fact Summers and others back then were pushing for massive fiscal spending to cure “deflation” and others pushed MMT…..and then we saw the fruits of that incontinence. Whoops
The Bush/Cheney regime shows MMT works as long as you pretend to oppose MMT. So for MMT to work you can never say that you support MMT because then people will expect you to print them dollars.
Why economists will not acknowledge that the economy is good I have no idea, but I know why the average person has a problem.
Inflation is deeply troubling—many of us spend a lot of energy trying to find low prices, and when prices go out of control, like $5 eggs and $5 gas, it's a shock to the system. And when economist tell us inflation is over, the prices are still way higher than what we were used to. And our wages probably have not gone up correspondently.
There's a similar problem with the term "recession." When a recession ends, that only means that the economy has stopped getting worse. It doesn't mean that all the damage done by the recession, especially lost jobs, has been repaired. The average person who's gone through a recession is still suffering significantly when the recession has been proclaimed “over."
Incidentally, the people who have the privilege to announce that an inflation or a recession is over, all have well paid secure jobs. That fact shows in their clothing and the serene look on their faces. That's why ordinary folks have trouble buying it.
What people forget is that inflation dropping does not also have to correlate with prices deflating eg negative percentages...they can just stop rising further at 0%, or slow their pace of increase eg 2-3%.
Especially when compared to other nations, the United States managed the Covid impact on the economy very well. Both the Biden Administration and The Fed deserve kudos for the job they have done. They will be taught in future economics textbooks.
The impact of the lockdowns created mass devastation and destroyed the health of hundreds and thousands of people, not to mention the low-trust society that resulted from the isolation. It could be argued that the economic shutdown was actually more devastating than covid itself.
I don't see this. It's not actually possible to do a counter-factual assessment of the damage that a no-lockdown policy would have caused, but the initial lockdowns appear to have had a strong impact reducing fatalities caused by combinations of Covid and hospital overload. The fatality rate for Covid declined substantially, which you'd have to count as saving hundreds of thousands of lives and as many case of serious/chronic illness, so holding that the lockdowns destroyed hundreds and [of?] thousands of lives tells me you're looking a statistics I haven't seen. What are they?
"Mass devastation" certainly does not describe anything remotely like life in the midwestern state I live in. Perhaps there are other areas of the US that are post-apocalyptic.
I agree that in retrospect, school closures went on longer than they should have, and created unnecessary learning loss, which was a serious error.
Agreed, other then school closures most "lockdowns" were "you can't sit down to eat in your favorite restaurant anymore" style restrictions. That caused some issues for sure but mass devastation and destroying lives? I don't see it
So what about people living in abusive situations with their spouses who couldn't leave their houses? People whose medical treatments were delayed? People who couldn't visit their dying loved ones in the hospital? People living in close and uncomfortable quarters with roommates? People with obesity and disabilities and who couldn't go to the gym or physical therapy? Just because a demographic is invisible doesn't mean that it doesn't exist. Are we looking at society on a larger scale here or just zooming into the affluent?
Like I wrote there were no lockdowns like that in the United States, you are thinking of China maybe? If people couldn't get medical care obviously that's bad but I'm not going to pretend people living in uncomfortable conditions is having their lives "destroyed"
Did you live in NYC or SF during the lockdowns? Perhaps you weren't in either of these cities. Now imagine any victim of spousal abuse having nowhere to go during this period. Did you try getting medical care for a serious illness during this time? Now imagine people who were already next to death trying to get medical care for something besides covid during this time. Tell the mother who couldn't see her son dying of cancer in the hospital that her life wasn't destroyed. Tell the people who were evicted from their homes as the cities were shut down that their lives weren't destroyed. When you shut down the economy you shut down human life. Not everyone had the resources to pull through.
And in fact the US did a much better job of mitigating the economic harms to small business owners and their former employees than many other countries did.
But more people died from Covid than in other advanced countries. North Carolina got the balance the best which means Florida could have had 20,000 fewer Covid deaths with a strong economy had they just done the mitigation measures implemented in NC.
NY had 900 deaths per day from spread prior to mitigation measures and never got close to that over the course of the pandemic once mitigation measures were implemented. So that’s essentially a 9/11 over 3 days in NYC without 15 days to slow the spread.
Not quite sure what prior point you're addressing Pangolin, but if it's the appropriate use of "mass devastation" I think New York in those days might justify it. Ms. Haywire was using the term to characterize the consequences of the mitigation measures that brought an end to the city's initial crisis.
The initial mitigation measures were appropriate under the circumstances. Just allowing time for the medical community to develop best practices for treatment saved tens of thousands of lives which meant 15 days to slow the spread was necessary.
Obviously Hawaii did the best with mitigation measures because it doesn’t have an interstate running through it and so it could test people arriving on planes. The Florida Keys shows that just being difficult to travel to greatly mitigated spread of Covid and so travel restrictions definitely reduced Covid death rate.
I personally believe the states that found the best balance were the few red states with Democratic governors that continued to allow cities in their states to implement mitigation measures which reduced spread which can be seen clearly when comparing Covid death rates with the adjacent states they are generally compared to. So Florida could have had a significantly lower Covid death rate had DeSantis done what Cooper did in NC.
I'm not sure we can trust numbers coming out of China or other authoritarian countries given their general opaqueness. Still, we did have a unique problem in this country handling the crisis.
Good point, Slaw. Our response was terrible. But John E is right that accurate numbers would probably lower (in the good sense) our comparative profile seriously. It's not just authoritarian countries like Russia and Belarus: low income countries such as India and many African states clearly had vastly inadequate reporting infrastructure. One thing the US seems to have done exceedingly well is to count and centrally report cases and deaths.
But a disproportionately ineffective response doesn't equate to "mass devastation," as can be proven by walking around whatever city or town you're in. what was terrible about the US response? And bear in mind that this non-existent mass devastation, according to Rachel Haywire's comment starting this string, was not caused by Covid, but by lockdowns.
How is it non-existent? Please see above. People could not see their dying loved ones in the hospital or go to the gym when they were disabled. They could not leave the house to get away from their abusive spouses or roommates. A woman was stopped in the streets of San Francisco for jogging. NYC businesses closed, all at once, without any real warning. Hospitals that were treating non-covid related illnesses were overloaded and postponed treatments for thousands of people in need. These people may be considered outliers because they have a low SES, but we need to account for the full picture.
Yes. People could not see dying loved ones (especially the case in nursing homes and hospitals, as I well know) or go to the gym. Restaurants closed. And now I know a woman in San Francisco was stopped for jogging. (In my town, women still fled abusive husbands and were taken in by the local shelter, but perhaps not where you live.) If you consider these things to be "mass devastation" I have to wonder what term you would use for cases where there is truly mass devastation, such as the destruction of Bakhmut.
And what caused these things--apart from the jogger, perhaps--was not lockdowns but Covid. If people had visited dying loved ones some proportion would have spread the disease to the loved ones of others; if they had gone to the gym they would have carried the disease home to loved ones; if dining had continued as usual the disease would have spread to more people than it did. Making those avoidable deaths happen in addition to those that did would have brought us closer and closer to true mass destruction.
And as someone who had to postpone treatment because of Covid I have to wonder, what does SES have to do with this?
Slaw, Am I wrong here? To say that something is not "mass devastation" does not suggest in any way that it is therefore not an issue.
If you want to set the bar for "mass devastation" at one million lives lost in a country of 300 million then I can only accept the use of the term. For me the term connotes Hiroshima or Fukushima.
And recall that Ms. Haywire was not talking about deaths, she was talking about lockdowns.
This view ignores that there were no actual “lockdowns” in the US and that business would have still fallen off a cliff in a world where the US governments just ignored Covid and did business as usual. It might have been over more quickly, and probably with significantly more deaths, but it isn’t like people watching what NYC went through on the news weren’t going to change their own behaviors in the aggregate.
Too many schools stayed shut for too long, causing significant social and academic learning challenges for kids. A primary reason was that indoor air quality was not properly addressed both physically and informationally. Many schools should have been opened back up much earlier than they were with relatively low cost. My spouses school reopened for half-time school in October 2020 and full-time school in January 2021. If the CDC and schools were on top of it, they could have fully re-opened for the entire 2020-21 school year. But the air purifiers were only starting to be delivered in October 2020 in her school. I had already purchased two for her classroom in June 2020 once it became clear that would be a major contributor to safe reopening.
I haven't seen evidence of any other significant government-imposed closures after the initial month or two in 2020. Studies of credit card spending, etc. showed that people were shutting down their forays outside their home before any government edicts required them to. Similar to schools, much better communication on improved HVAC, including widespread use of standalone air purifiers, would likely have greatly improved the public's confidence in dining out etc. once vaccines started to roll out. Even now, I use a CO2 monitor to check public spaces and most are still pretty bad (including internationally known venues) for indoor air quality which is an issue for Covid, flu, RSV, and other respiratory diseases. I wear a mask to some performances and avoid some restaurants because of real-time measurements I do, similar to dealing with wildfire smoke. We have the opportunity to substantially improve our ability to avoid large waves of respiratory diseases, but public health agencies are largely refusing to acknowledge or publicize it.
Yeah it was actually the Trump administration which was responsible for the earliest measures to inject liquidity into the economy. Don't forget Dems pouring trillions onto an already hot economy in early 2021 with the American Rescue Plan Act which led to the inflation we experienced. That experience has unfortunately tainted everything else the Biden administration has done since.
ARP/IRA did not cause inflation. The Fed caused the inflation going on too long. Some inflation was good and necessary to allow the economy to adjust to COVID/supply chain shocks.
I think the low rates continued for too long. With the large tax cuts of the Trump admin, there should have been a corresponding rise in rates-- nothing crazy but a rise nonetheless.
Managed LESS BADLY than many other countries. Vaccine roll out was too slow. There was no asymptomatic testing available until way too late, Vaccine messaging "it's safe" rathe than "its effective" was a disaster. CDC provided little guidance to decisionmakers about how to craft cost effective NPI's for their specific locales.
I agree that the Fed deserves kudos for management up through mid 2021. Then it went off course by being too late starting to bring inflation down and then may have brought it down too quickly. If there really is no recession this criticism will be wrong but post 2021 kudos are premature.
"Vaccine messaging 'it's safe' rathe than 'its effective' was a disaster."
I'd say the messaging that the vaccine only works if everyone gets it was a bigger disaster. I've had my share of tetanus shots in my life, and never was a told that they won't protect me from tetanus unless everyone else (or at least all around me) also get tetanus shots.
The messaging on vaccines was abysmal. The mRNA Covid vaccines are a major public health triumph. There are very few vaccines (effectively can be counted on one hand) that truly eliminate getting sick at all for 90%+ of the population. A vaccine that is 50% effective at preventing the disease at all and is 90%+ effective at preventing hospitalization is a massive success. Most diseases are still around because of the difficulty of creating a vaccine for them, not delivering it.
The "too fast development" argument was utterly bogus. mRNA has been researched since the 1980s for use as a vaccine. The big breakthroughs in making it usable were almost 20 years ago. The reason it hadn't been used yet is that the common vaccines already had massive supply chains, so they were working on really difficult vaccine problems like cancer and HIV for mRNA use. The delivery vehicle was already in place when Covid showed up and Covid was relatively easy to develop a vaccine for. It was essentially just a case of dropping a different engine into an already designed car.
Most vaccines typically start out as a killed or weakened virus. Sometimes a surrogate (e.g. cowpox instead of smallpox) can be used in the early days. It often takes years or decades to move onto safer alternatives. That is the brilliance of the mRNA vaccines - they can be coded quickly to mimic non-dangerous parts of the virus thereby skipping a decade or more of less safe vaccines.
Most of the "traditional" Covid vaccine development approaches crashed and burned due to many of the same challenges vaccine development and production has had over the past century which is why there was so much focus on mRNA development in the first place.
No, they went through a normal testing period, but it was unusually easy to collect test data because there was a pandemic, which is why the trials ended quickly.
Certainly. That's what you do in an emergency: cost/benefit trade-offs based on best available information. Our ordinary drug testing regimes are maximally cautious as a result of past instances of catastrophic mistakes (thalidomide being a major prompt). Catastrophic cases are rare but . . . catastrophic, so we give them great weight. But when the prospects of a pandemic are catastrophic, both in terms of health and social wellbeing, we make a conscious choice to cut corners, given that the odds of any one drug the survives short-term trials being toxic are low. It was a low-risk gamble, and we won.
"Tetanus is not an airborne virus that is coughed out and breathed out by human beings. Tetanus is a bacteria that lives in soil. "
I know. My point was that tetanus shots may offer me - personally - the guy getting the shots - protection against tetanus, but it has nothing to do with other people. They can get the same shots themselves, or not. Up to them. I don't demand they be fired from their jobs for not getting one. And I don't demand everyone around me have a" tetanus vaccine passport"
"The COVID vaccines had only a small impact on the transmission of COVID; they had a giant impact on how sick you became."
This was my point about the messaging. The zeal to fire and socially ostracize anyone not CVOID-vaccinated did a lot of damage and for what purpose if they had such a small impact on transmission? A elderly or otherwise vulnerable person may be foolish to not get the shots, but we don't need to ruin the lives of younger non-vulnerable people in all other aspects just because they make a decision different from the one I would make. Anyway, that's my opinion on COVID shot messaging.
". . . for what purpose if they had such a small impact on transmission?"
The purpose was to prevent transmission. The information that it did not have as large an effect on transmission as believed came later. Your argument relies on hindsight. When making critical decisions, the general rule is to choose the option with the best cost/benefit ratio based on available information. That later information changes the calculation does not mean that the initial decision was the wrong one to make.
It is also not correct to say that vaccines had no effect on transmission: you are less likely to contract Covid from exposure to vaccinated people carrying low virus loads than from unvaccinated people whose virus loads are unchecked by antibodies. This mattered most to those who unable to be vaccinated, either because of medical conditions or because their general low-risk profile kept them out of vaccine eligibility during the rollout.
I think it's correct to say that vaccine mandates appear excessive in retrospect in most cases. However, having grown up seeing the universal relief that the polio and MMR vaccines brought us in the '50s and '60s, and the way those major diseases were virtually eliminated in the US, what seems more perverse to me is that the fiction of vaccine danger and the force of political opposition to the incoming administration led to widespread vaccine resistance in the first place.
Maybe you remember things differently than I do, but my recollection is that it became very clear that the shots did not stop transmission by the middle of 2021. Yet, all the "appear excessive in hindsight" mandates continued well into 2022, some into 2023. such as the "travel to US requires covid vax" rule.
"It is also not correct to say that vaccines had no effect on transmission: you are less likely to contract Covid from exposure to vaccinated people carrying low virus loads than from unvaccinated people whose virus loads are unchecked by antibodies"
The crux of the biscuit. Just too many examples of vaccinated people getting and transmitting covid made people discount this notion.
Sorry to drag this into yet another covid policy circle-jerk. It's not the purpose of this blog or this article. You made a comment about "messaging" and my opinion is different than yours as to what part of the messaging caused the most harm. Yes, the "must get Trump" politics followed by the "I resent how you got Trump" politics didn't help.
A major purpose was also to prevent the hospitals from being overwhelmed which was causing mortality in its own right. People who refused to be vaccinated, got sick, and went into hospital sucked up massive resources that caused problems for many other patients who had other health problems. There is a tragedy of the commons issue with that aspect alone. The large number of excess deaths the US had in 2021 and 2022 were not just Covid deaths, but other deaths as well. Many elective surgeries for improving quality of life were also postponed for a long time because Covid overwhelmed the medical system.
I think there is no good evidence of how the messaging affected responses, and from where I was looking the message of "it's effective" was extremely loud. The only reason "it's safe" became a headline was because of a systematic campaign that claimed "it's more dangerous than Covid," a campaign that still won't quit.
Kathleen Weber responded correctly to the comparison to tetanus. Your point would have worked if you'd used, say, the smallpox vaccine as your example. The message that the vaccine "only works if everyone gets it" concerns stopping pandemic spread, not individual vulnerability.
"The message that the vaccine "only works if everyone gets it" concerns stopping pandemic spread, not individual vulnerability."
My point (apparently not well-made) was that tetanus shots have nothing to do with transmission, and neither did the COVID shots. But they were hard-sold that they would stop transmission. Hence, firing/ostracizing people or otherwise restricting their lives became very fashionable.
Once people realized that the COVID vaccines did not, in fact, stop transmission, it made it a lot easier for them to wonder what else they were being mislead about = greater mistrust of safety/effectiveness, which was highly destructive.
If Pfizer and their government mouthpieces had simply said: "This vaccine will offer you protection against severe COVID, but not immunity to getting or transmitting it, the ensuing fallout would not have happened, since there would have been no false advertising to begin with. A messaging problem ....
The vaccines did reduce transmission. Agreed this is not the same as stopping. They also allowed much more social interaction with much less consequence. It is very clear that hospitalization and deaths dropped dramatically with vaccine recipients despite them participating much more in public setting than before the vaccines.
Vaccinated people had a much better chance of not being infected at all and were likely to be infectious for much shorter periods of time with less severity. That reduces R0 in its own right.
Recent studies indicate that about a quarter of the population has never been infected by Covid even though over 95% show antibodies to the Covid virus or the spike protein. The vaccines clearly prevented a lot of infections of any type. This is probably far better performance than you would see in the population for the various flu viruses or the common cold. https://thehill.com/policy/healthcare/4079515-cdc-2022-almost-quarter-did-not-get-covid/
My wife and I were vaccinated and still got it. I have no idea if the severity was decreased, since this was late 2021, and the punch packed by the then current strain had substantially decreased. I'm not saying the vaccines were ineffective; I just think the messaging should have been more honest. Even "we don't know" would have been more honest.
But it was known that the vaccine neither prevented infection or transmission, but Biden was loudly and falsely proclaiming that it did, even going so far as to pressure Facebook to not allow posts pointing out that lie. The only vaccines that should be even partially mandated should be for vaccines that stop transmission and in that case only for public school children.
The vaccine did prevent infection and it did prevent transmission, but it did not prevent infection in all cases and it only prevented transmission to a moderate degree. What it did overwhelmingly well was to reduce the likelihood of necessary hospitalization and almost eliminate the risk of death.
What is the message a president should convey publicly during a pandemic emergency given those facts (recalling that some of the less elements, such as that transmissibility was not eliminated emerged only gradually)?
And what was the actual content of those Facebook messages. Were they saying, in essence, "You can still contract Covid, though with milder results, and it can still be transmitted, though somewhat less likely," or did they say, "The vaccine is ineffective and itself more dangerous than Covid?"
Is it really not worth it to reduce the frequency of four or five days of being very sick? I would much rather have COVID once every few years than have it every year, given the experience I had when I had it, even though there was little risk of long-lasting harm.
I'm not sure what "not really worth it" means. I know young people who contracted Covid early on, and although none died, a couple encountered "long Covid": it would have been really worth it to them to avoid the disease.
That's anecdotal, of course. For your point to be valid there would need to be data comparing the likelihood and severity of negative consequences from the vaccine and from contracting Covid for people in that cohort. I don't know of any such evidence, and would welcome seeing it.
You need to post some real proof that the vaccine is more dangerous than the disease for some cohorts. Everything I have seen with actual data attached points to the opposite conclusion. Based on current data, it is less important for some cohorts to be vaccinated, but to say that the vaccine is more dangerous than the disease is a totally different argument.
There was no such messaging of "it's safe" rather than "it's effective." The message was always that it was safe and effective. (*Every* appeal to people to be vaccinated included a statement that it would increase personal safety, and the rollout by age group was always rationalized as prioritizing personal risk-reduction, not "herd immunity.")
I agree that the rollout was too slow (though government financing and development was astoundingly fast). Given that we knew a vaccine was likely coming by mid-2020, better logistics could have been put in place. (I have no familiarity with NPIs; perhaps your point is valid.)
I hope the future economics textbooks describe the 10s of billions of dollars handed out without even basic verification which has not only caused most of that money to be lost fraudsters but also contributed to the debt and inflation. And Noah didn’t mention the national debt at all, being a Biden shill as he is, which will now be bigger problem since all that new debt comes with much higher interest rates and since spending is not being cut to compensate even more debt will be added on to the downward spiral.
The problem in 2008 was that there were so many anti-fraud controls that much of the money didn’t get spent until three or four years later, and so the economy had a long low patch. The COVID money was done right, where we accepted a bit of fraud and inflation as a reasonable tradeoff to prevent a major recession and resulting mass unemployment.
I think the underlying logic here is really important. We confuse the imperative to punish known fraud with an imperative to avoid any possibility of fraud by providing no support. Fraud and corruption are negative aspects of any functioning polity. It's important to address them with controls, monitors, and sanctions, but if your sole criterion is to avoid them the polity cannot function.
I completely disagree. The size of fiscal stimulus put into the already recovering 2021 economy (nearly 15 pct of GDP between Dec 2020 and Q1 2021 handouts) was grossly irresponsible and unnecessary and supported by zero economic analysis from Yellen. Pure vote buying that instead helped trigger a global inflationary spiral and mismatch between goods consumption and production. The Fed insanely listened to some of the pro-MMT/ “run the economy hot” types, perhaps in part so Powell could get re-appointed and foolishly accommodated (probably spurred) inflation, engaging in QE and ZIRP in a too hot economy.
This was a huge policy error by Biden, Yellen and Powell (and Brainard and the Fed econ staff that Yellen hand-picked). They all should be sacked asap
Because we converted a potential huge unemployment shock into an inflation shock instead, which is much easier to deal with, and has fewer long-lasting consequences.
I think there is a fifth element folks want from the economy: Stability and predictability. All this economic chaos reframed as business cycles is very unsettling to the common household trying to provide for a decent life, and plan for a dignified retirement, and leave a bit for the kids.
I totally agree. A significant patch of inflation, whether in the 1970s or the 2020s really wrecks your sense of stability. It's much more painful than economic policy makers seem to realize.
Ok, so you're describing an already comfortable household which is scared bc inflation is eating the purchasing power of their too-good-to-leave jobs and probably very mad that their mortgage payment increased significantly.
Not to say these ppl don't matter, but just to put things into context, most people don't want stability (which just means *being stuck* if your situation is not so great), they want *progress*.
And this economy delivered it! Now you take a job from a company that once would not have deigned you of an interview, and if you don't like it, you just look for a better one! It's great, not only in terms of material comfort, but also psychological one. Finally precariety is the company's cross to beat, not the workers'!
I wish we could have done it without destabilizing so much the life of the already settled down, but in utilitarians terms, it's clear more people are better off than before
This seems right. Here are some anecdotal reasons why it subjectively "feels" like the economy is bad in my own life:
- The grocery store in my neighborhood, which was open until midnight for more than a decade, now closes at 10. The deli is rarely open even during posted hours. Often there is no one running a regular checkout line, and usually half the self-checkout lines are closed as well. The formerly 24/7 supermarket a little further out is now open until midnight only.
- Many restaurants are closed one weeknight a week. This was unheard of in my town until 2021.
- It's impossible to get an appointment to see my primary care doctor less than a month in advance, and from what I hear trying to find a new one is even more impossible.
If these reflect broader trends, it could be that the labor market isn't at equilibrium yet--wages might need to rise further (with more inflation consequently?). Or maybe the service economy is just going to be providing worse service to the consumer from now on at the new equilibrium.
Your experience is similar to mine. Restaurants are closed at least two days/nights a week, and have more limited hours when they are open. We are told this is due to labor shortage, not lack of customer demand. We are told the labor shortage is because there is no affordable housing for people who work these jobs. This is the same in both places we live (we split between Wydaho and Kauai), although it is worse on Kauai.
I've had a hell of a time getting a new crown on a tooth because my (highly competent) dentist is booked for months on end. Can't even schedule a cleaning less then 7-8 months out. I can't get an electrician to bother to come over for a small job. They all want the big bucks in new construction. I can't get a roof vent fabricated within two hours of the house for the same reason. I will say this, the demand for anyone in the skilled and semi-skilled construction trades is sky high in Wydaho and on Kauai. New construction and remodels happening all over, and waiting lists of a few years for builders.
Yean yeah, anecdotal. But as another commenter says, it is my lived experience which apparently makes it universally true according to some folks.
We are largely out of workers. The primary extra work force left is the retirees coming back to work. As the Boomers age, that available work force will quickly diminish.
Historically, the US has used immigrants to fill these gaps. US immigration policy is broken and is not allowing many in. Many companies have relied on illegal immigrants to perform construction and hospitality work. States (e.g. Florida) have been passing laws to make it less enticing for companies to use those workers, which means those employers are now trying to figure out where to get workers. Registered asylum seekers have long waits for their hearings. In the meantime, immigration law doesn't allow them to work so they sit on their fannies when they really want to be working. The US is choosing to restrict the work force.
Something I've really learned over the past couple years is the extent to which certain middle-class/upper-middle-class amenities rely on a large pool of cheap labor that has now, to an extent, dried up. To be clear, I think this is great, but I do think it lowers quality-of-life in some visible ways.
The most obvious thing are the much more limited hours many restaurants are keeping post-covid. If you want to go out to dinner Monday night in my neighborhood, your options are extremely limited right now. Late night dining has been obliterated.
You can also feel that fast-food service quality has declined significantly while prices are way up. Lines are longer, quality is worse, and things are just more likely to go wrong. This is starting to stabilize and get better as major chains are deploying some fancier technology, but it's still often a worse experience than I remember pre-pandemic.
I take these sorts of changes as being evidence of a good economy. But I can easily see how someone who doesn't think about it as much might take these sorts of things as a sign of a bad economy.
Yep. If a fast-food joint loses 2 of its 20 employees due to a tighter labor market and more customer tantrums, and that inconveniences 100 SUV drivers in Oakleys who want the drive-thru to be as snappy as it was 4 years ago, the complaints of the 100 SUV drivers are louder than the "Yippee!" of the couple of employees who got to become bank tellers or Pre-K teaching assistants or whatever. Same kind of fallacy as thinking "HELP WANTED" signs must mean the economy's sinking.
Also, there was real emotional trauma that occurred over the last few years. People feel pessimistic about the country, the world, and their lives, and they let that color perception of the macroeconomy.
Its not hard to see why new homes are more expensive. They are substantially larger than what were built 40 years ago despite family sizes shrinking. Try and find a new 1,000 sf-1,500 sf starter home anywhere in this country which would have been normal 40 years ago. https://www.statista.com/statistics/529371/floor-area-size-new-single-family-homes-usa/
Permitting and zoning requirements are forcing new home construction to be unaffordable. Smaller lots, smaller homes, more multi-family housing with less permitting hoops and much of the affordable housing crisis vanishes. The village next to my housing tract refuses to allow multi-family housing to be built even though it would replace abandoned industrial buildings in a walkable community. The people those apartments attract could be workers in the stores on main street with the "Help Wanted" signs up in the windows.
We can dream but I'm not sure that's really possible. Consider that even if housing is much cheaper, there's still only a limited amount of goods and services our economy is capable of producing. Housing prices going down would free up a lot of money but not necessarily drastically increase production, which would push prices up for all non-housing goods.
That's fine, it would still have people paying less on housing as a percentage of income and would help with the smothered feeling. I should really have said with 2/3rds the cost of housing, I know people in CA who are paying close to 50% of their income on housing. That just hurts, even if the money left over is still enough to afford nice things. It just creates this amorphous feeling like you are being stolen from and that the whole thing is rigged against you. Getting that down to a third of income would almost certainly do a lot for the vibes.
People feel the economy is not doing well when they see boarded up businesses wherever they go. (I'm fine, but my neighbours have gone bankrupt.) What's the vacancy rate for commercial businesses these days in the USA, and does it vary a lot depending on where you are? Anecdotally, I read that Americans are moving to the suburbs (where they need new commercial business buildings) and working remotely a lot more, which would leave the cities with a lot of empty commercial buildings that are unlikely to find tenants any time soon.
You know, there were a bunch of small businesses in my suburban town that did not survive COVID. But now there are new small businesses moving into their previous shops/buildings. Also the restaurants are now increasing their hours and opening for lunches again.
I’d recommend not celebrating too early. There’s a tsunami of consumer debt accruing at 25% compounded, commercial real estate is in dire trouble, the stock market is overvalued, and real life goods like gas, energy and groceries are sky high. You may think things are better because you don’t live in a world where your necessities are 30% so you have to charge basic needs. Recent data shows consumer savings is pretty much tapped out.
“The fact that Fed-induced curve inversions have presaged recessions 100% of the time in the past is never respected. Always a case of hope triumphing over experience. Thing is — very rarely do recessions occur in the same month as the onset of the inverted yield curve. There are lags, and that typically can be a year or longer. Think back to 2007. But like the story of the boy who cried wolf, the wolf did show up in the end.”
Wages have gone up faster than inflation for the bottom quartile. There has been a huge shortage of employees for those jobs. Amazon and Starbucks offer benefits now.
I've always been a low income earner. The last few years my income has been about 29k annually. Even though low income I've been fairly smart and own a home and a rental house. I'm 65.4, still work almost full time, and have not taken social security yet.....trying to hold out at least until full retirement age of 66.8. It's been harder for me to buy healthy food than ever before in my life. You say inflation is going down, but prices at the grocery continue to rise. My costs for electricity and insurance have gone way up for the last few years. I live paycheck to paycheck with a very small cushion. And if I hadn't been at least a little smart with my investment in real estate I can't imagine what my life would be like. And there are MANY people in that boat with no hope of ever owning a home at this point...and that's been THE major investment for the majority. And from what I hear about the rise in cost of materials for manufacturing we are going to see some severe inflation as those price increases reach the consumer. As an example some materials for making car parts are seeing a 1000 percent increase. I'm sorry, but you do sound like a shill for Biden.
In tech, it's particularly messy. I'll speak to the handful of areas I've analyzed: semis, Big Tech, and VC markets.
Semis existing in this super-position of extreme demand in some areas, but massive questions about how these fabs will actually get filled. Yes, AI is hot, but NVIDIA doesn't actually use enough wafers compared to consumer applications like the iPhone to keep a fab completely utilized. As consumer sentiment wanes, it's forcing semiconductor manufacturers to question their growth strategies at the same time that the US government is providing massive subsidies to build new factories here. The result is a strain on the labor force: sales and marketing is getting layoffs and trying to find hot areas to stay, while engineering and manufacturing are working especially hard to deliver fabs that may or may not be used.
Big Tech has gone through its "efficiency" stage, shrugging off a huge amount of people. There are just permanently fewer Big Tech jobs (at least on the growth side), and the startup ecosystem can't absorb them all. These orgs may still be shedding jobs (Google is still perceived as being overstaffed) so it will be a while until they start staffing up again. These were extremely well-paid jobs with cushy benefits (and questionable productivity) that are just gone. Anecdotally, the people I knew in this situation have gone to more traditional companies (grocery stores, hotels, etc.) trying to figure out their digital media strategy. I am curious how the Big Tech growth playbook shapes those companies in the near future.
Lastly, there's VC and startups in general. The short version is that the VCs had less capital to deploy, so capital that flowed like water in 2021 is now a streetfight. Worse, they all are raising at the same time with worse valuations and terms. 2021 was insanity for startups, with a glut of new companies raising at insane valuations. Typically they would raise 18 months worth of capital, meaning they would all be looking for new capital by mid-2023. In the intervening months, the Fed raised interest rates, which put a chill on how much capital flowed into new VC funds, such that there are fewer deals. One deal tracker put Q2-2023 as the worst quarter for startup dealmaking ever observed: https://twitter.com/AngelList/status/1684594617629503488?s=20. It also closed the "IPO window", such that more established companies looking to exit via IPO either can't or shouldn't (the price would be worse, can get capital elsewhere, etc.). The result is fewer companies, jobs, harder to start a new company (in anything but AI), and no liquidity from any work at those existing startups. VCs have predicted Big Tech would start acquiring them in Q2-Q4 of this year, as companies ran out of cash. Considering how tech has powered the stock market, it's also reduces potential investment opportunities, though I expect the best still make it to the IPO window.
I think it's fair to roll many of these anxieties into "upper middle class people are less well-off" which describes most of the issues discussed here. But I expect we have not fully reckoned with their implications yet. If the CHIPs Act spurs a bunch of empty factories or factories too expensive to turn on, the shortages of workers is going to reverse overnight. Will there just be permanently fewer paths to upper middle class lifestyles with fewer Big Tech jobs? Does something replace that? Is there just a missing class of tech companies or do they get pushed to a glut hitting the market as soon as Wall Street sentiment shifts? Are they productive in the mean-time, or do they have to sell and big companies either absorb their benefit or erase a potential competitor for a while?
I don’t really know medtech startups. I have an acquaintance that is doing neurotech investing who is actively investing, so that’s hot. I know sleep apnea has surged as the US population ages. Beyond that I’m just guessing, which I will! It always exists in its own bubble as many have to go through regulatory approval and the technical diligence required is so different from the rest of tech. I could see it proceeding at its own pace, getting a bump from anyone that’s leveraging AI, but I expect it’s down from 2021 levels because everything is.
Thanks for the reply. I am a long-time SV patent attorney. My career transitioned from semi-conductors to med device somewhere along the way. I've ben involved in a lot of investment IP due diligence of med device start-ups, on behalf of both VCs and acquiring Big Med corporations, as well as on behalf of individual start-ups. I have heard grumblings from the later group that it was getting difficult to get into those round Ds and Es (and Fs and Gs) that it takes to get through all of the regulatory, but I have not seen any impact on my workload, maybe because I am in the process of slowly reducing my workload to zero in the not too distant time frame.
Behold! An “okay” economy is when there are lots of high-paying job openings. A “good” economy is when I in particular have lots of high-paying job offers
I can share my personal perspective as someone who is objectively doing "well" but losing ground relatively speaking. Contrary to most respondents, I think that the overall economy is good (based on reported stats) but my own personal financial situation is declining and this colors my view of Biden making me less likely to support him.
1. Averages are just averages. Some professions see different rates of pay increase. CMS has been cutting medical reimbursement rates for several years now. In my field of medicine, we've seen a 25-30% effective pay cut since the start of the pandemic, meaning that my colleagues and I have to see more patients, work more shifts, or do more procedures just to tread water. My group has had stagnant nominal (!) pay for 5 years and workload has increased by about 15%. This has led to a lot of disgruntlement. Some are even leaving to become coders.
2. Each person experiences inflation differently. Again, averages are just that. My situation is probably not unlike a lot of people in that my basket of household consumption changed drastically during the pandemic. The first two years we experienced a lot of the goods inflation and shortages (cars, computers, consoles, appliances). Then this past year our spending has shifted like most people to be light on goods and heavier on services - car repair (60000 mile checkup without repairs cost me $1000), dental work, travel, entertainment, AC installation (quote $30000). Coincidentally, the timing corresponds to service inflation taking over for goods. Essentially we've seen 3 years of 7-10% yearly inflation just due to shifting composition of spending.
3. In addition, just like many people we delayed having a kid the first two years of the pandemic and just had our first child last year, just in time to experience the high cost of child care (another service) - $3000 per month where we live. We've had to cut back on other services such as landscaping and take over doing it ourselves to make ends meet. Another source of worsening quality of life.
4. Wealth effect. I live in a heavily blue urban area on the west coast. I bought a house in 2018 and sold it early this year for about a 15% total gain. That sounds good but it's actually just breaking even after factoring in property taxes each year, repair/renovation costs, selling commission, and inflation. While there are some contributions from remote work, I also blame BLM protests and defund the police movements (both Dem adjacent things) for ruining the urban desirability of my area and affecting my home price.
5. Wealth effect part 2. The stock market has gone crazy this year but like a lot of people I sold most of my stocks and went heavily in cash at the end of last year expecting a recession, therefore missing out on the boom this year. My industry is also very defensive not cyclical so I obviously feel some disgruntlement that the excessive stimulus of the past few years has prevented a recessing which helped everyone but me.
6. The political dimension. Biden's policies have helped the working class but the upper middle professional class has not seen real wages catch up to pre-pandemic trendline. The professional class is part of the democratic base and has good reason to be disgruntled. The working class is largely populist/Republican base and Biden's efforts to poach them have not yet borne fruit. These people are probably out of reach and even if experiencing good times personally, are loathe to attribute it to Biden. In short - working class will respond negatively to economic surveys due to partisanship and professional class will respond negatively to surveys due to actually losing ground - which equals low approval ratings from both Dems and Reps.
7. State level factors. West coast blue states and cities are increasing taxes. WA passed a new payroll tax and a gas tax hike. OR passed several local city/county income taxes (Salem and Portland). Gas prices have stayed $4+ in the NW even as crude oil prices have come down. Yet another area where we're being squeezed.
So in summary, averages are great, but they can conceal a lot of variability at the individual and sector level.
The population of Portland and Salem (my birthplace) are uber-majority Democrat, and Democrats like higher taxes. They say this out loud, so it's not like you were not warned. It must drive the Proggy-arm of Democrat Oregonians that there is no sales tax, even though this is a regressive tax. If only they could institute a sales tax that only hit the evil rich people. Hmmm. Must be working on that. Maybe they can monitor your bank accounts and tax you based on all withdrawals?
I live in NY. I think we are if not the highest taxed state, at least the second highest. We have a sales tax which varies by county for goods and services but it does not apply to food (unprepared). Also I think there is some kind of dairy subsidy because our milk is less expensive than other states (usually around $1.99-$2.20/gallon). We have a state income tax but it is progressive. Everyone pays something but there is a big jump at the $107,651 mark. You go from $628 + 5.85% of income to $5,976 + 6.25% of income from $107,652-269,300. This also doesn't take into account that there are a few cities (NYC & Yonkers) that also have an income tax, and there is a commuter tax (outside of tolls) and of course local property taxes. It is not that we enjoy the taxes but if it comes to losing good teachers, special education support, important programs such as medicaid, disabled services, state university support etc. we pony it up.
That was actually a proposal of some classical liberal economists (Einaudi and Hayek), to let people deduce all savings and then apply a progressive tax on the residual income, thus effectively having a progressive consumption tax.
From the tone of your comment, I gather it would considered a crazy socialist idea in today's America. Just another example of the right moving the Overton window I guess
Are you familiar with the 'eye test' in basketball? In basketball we have so many advanced statistics to measure performance, offensive and defensive efficiency, etc., and they are very helpful, but the 'eye test' is simply watching a player for a game and seeing: are they any good, can they defend well, can they shoot well, how do they perform under pressure, etc. Advanced stats are awesome, but the eye test is still used today and for good reason. They put you face to face with the thing itself, as opposed to stats that interpret it.
That's the kinda approach I have with this. I don't doubt your stats or info, and I can't argue them, my field of expertise isn't economics and you are much better read and educated about that than I am, so I assume you are correct.
What I do want to bring up is an 'eye test' of sorts for this issue. While all the data points to the economy being good, my lived experience in it, and of those around me, doesn't point to that. I know it's anecdotal experience but I think it's worth mentioning since it doesn't reflect these statistics.
My lived experience, as well as those around me shows:
- Prices for everyday items required for living, such as dry food, dairy, meat, produce, etc., have all gone up substantially in the last couple years. Getting milk, eggs, bread, protein, and produce for the house went from $50 to $75 (of course that varies depending on how many in your household)
- Prices for vehicles have gone up in the past couple years, especially used cars.
- Prices for housing have gone up dramatically in the past few years.
- Wages have not gone up nearly enough to match increased prices.
- From February to April many people lost their jobs, and have been unable to find replacements other than part time gigs here and there, Ubereats, etc.
- The cost of medication has increased in the past 2 years, and more part time jobs means less health insurance and more out of pocket expenses for healthcare.
- There are so many overqualified people in the job market due to layoffs that getting new full-time jobs is very difficult. Not as difficult as peak Covid, but definitely more difficult than before.
- The overall price of houses may have dropped but with homes being worth almost 3x what they were 15-20 years ago, many people are priced out.
- With wages rising so little, and housing costs rising so drastically, as well as low availability to begin with, people with full time jobs are forced to live with roommates just to afford living in the city where their job is.
Again, I know this is all anecdotal experience and might not be replicated on a large scale, but it's the reality for many people, myself included.
For average people, data that points to the economy being better doesn't mean much when your wages have barely budged in 3 years but the bills and rent are all significantly higher, and you're spending 25% more on groceries and gas, used cars cost almost as much as new ones, etc.
Agree with your comments.
One area where we're not doing well and it's causing real pain is home/apt building. No one could credibly disagree with the observation that we have a real housing crisis. Yet that's exactly where the current economy is coming up most short. Home builder's can't build (because they can't sell) in volume. And apartment construction has fallen off a cliff owing to the doubling of debt costs combined with equity having run to the sidelines (I'm a large scale apartment developer.)
So just when we need a large supply boost, and the YIMBY movement is making real headway on the entitlements front, the factors required for a big housing supply increase have run into a head wall in the form of the current economy.
I came here to say exactly this. And also to note that the drop in Median sale price does not necessarily mean home prices are going down, it may also (or entirely) reflect the mix of homes being sold.
Supporting Noah's comments about how the upper-middle feels, I believe that many feel trapped in their homes - with their home buying/upgrading plans frozen because homes and the debt to buy them are too damn expensive... See Bruce's comments.
"And also to note that the drop in Median sale price does not necessarily mean home prices are going down, it may also (or entirely) reflect the mix of homes being sold."
Typically, high end markets take a lot longer to drop than lower end. Instead, the sales just dry up. This is because high end sellers are not forced to sell as much as lower end sellers, so there continues to be a market at the lower end which changes the mix skewing lower.
Or, maybe it's something else.
Do you have a source for home builders not being able to sell? I would've guessed that home builders are selling even more now since home owners aren't willing to sell due to their locked in mortgage rates. Therefore, home builders are making up a larger % of home sells and coming out net ahead.
"Home builder's can't build (because they can't sell) in volume."
If there is such high demand - and there is in a number of areas of the country, how can this be true, unless the building costs (land, materials, labor, misc.) exceed what the demand is capable of paying (taking into account borrowing costs)? Is there an overabundance of brand new homes/condos/apartments sitting empty and unsold/rented out there?
Good points. I think the missing piece here is theres plenty of affordable homes they are just too small or in areas people don't want to live. There may be a shortage of relevant workers too- not enough construction workers in comparison with desk jobs.
As to your last point, I'm having a fancy pants storage shed built on our property. Took me a few years to find someone to do it since is a small job compared with building a house or large remodel. The crew I was finally able to hire a few weeks ago speak no English, but the google translation app solves a lot of problems, and my bits and pieces of school years Spanish is all coming back to me. And, they seem to be good builders for basic framing, siding, roof, doors and windows, wherever they learned their skills (these guys are in their 20s).
The Biden administration should do a Housing Improvement Act.
Apartment construction has not fallen off a cliff. In fact, we're at a near 40 year high in MFH building starts: https://fred.stlouisfed.org/series/HOUST5F
This chart is for 5+ units but if you dig into the numbers you see this is dominated by buildings with 20+ units, or Noah's "fish tanks."
Single family home starts *have* dropped a lot recently, though starting to move back up: https://fred.stlouisfed.org/series/HOUST1F
> Home builder's can't build (because they can't sell) in volume.
?!? https://fred.stlouisfed.org/series/NHSUSSPT
> And apartment construction has fallen off a cliff
?!?!? https://fred.stlouisfed.org/series/UNDCON5MUNSA
Useful info, but I think starts is more on point than those under construction (which may reflect supply chain issues): https://fred.stlouisfed.org/series/HOUST5F
I'm not sure it is more on point when Joshua literally wrote "construction" — but in any case, even the starts numbers you link are higher than they were in every month from 1989 through 2018 except for June 2015!
Interesting, here is some more data:
https://www.cbre.com/insights/briefs/looming-multifamily-oversupply-likely-will-be-short-lived
Would seem like progress being made on this front but Americans still by and large want to live in low density housing and that's always going to create tremendous upward pressure on housing prices. Maybe over time these norms change as millenials get priced out of single family homes.
I remember when that was a good rate.
I remember when my credit card rate was 21% (early 90's) and mortgage rates 8%. The thing is that they aren't static. The rates go up and go down. If fewer people take out mortgages, banks will lower the rates.
“If people take out fewer mortgages, banks will lower rates.” - This simply isn’t true. Mortgages have to both be profitable (I.e. charge more interest than banks pay depositors) and pay something competitive to other places banks can lend (government treasuries, corporate bonds, etc.). Demand for mortgages has very little affect on market interest rates.
But you can always renegotiate if rates go down. O
I think this misses an important point, which is that while INFLATION has gone down, PRICES haven't. Now, I know: inflation going down doesn't mean prices go down. Prices going down would be DEFLATION, and that's bad. Yes yes yes. But most people don't get this. For most people, inflation means "My groceries cost 15% more than they did two years ago!" And groceries still cost 15% more than they did two years ago. So inflation hasn't gone away. Again, I'm not endorsing that thought process, I'm just saying it's very common.
Sure. But if real purchasing power is higher than before, then it means that people's paychecks go farther under the new prices than under the old prices.
Average person experiencing quick rising wages and prices:
1) Wages go up: I did this
2) Prices go up: the economy did this
Result: I'm good, economy is bad
^^^^ A simple but brilliant analysis.
The wages for those workers went up the most ...
Agree. And it is (would have been) important for the Biden administration to push the "Prices go up: Fed/COVID did this. "
Handing out 15 pct of GDP between Dec 2020 and Mar 2021 in an economy whose supply the government was constricting and generating more inflation than real growth was those handouts was truly a genius move
A bit of inflation for everyone is much easier to recover from than unemployment for some fractions of the population. Of course, the latter is much easier for most people to ignore.
I still think the helicopter drop in 2021 should have been more focused on Americans with less savings. An easy way to have made it more focused on people with less in the bank would have been to do a $1 trillion reparations package that would have sent dollars to Native Americans and descendants of American slaves which are two groups of Americans with very little savings.
Yes. But groceries are still 15% more expensive, and that feels bad. Again: I'm not saying this is RATIONAL. I'm saying that this is what people are actually complaining about.
Yeah, when I see people talking on Reddit or Threads or X it is always "chicken breasts cost how much!?" and "fast food at Arby's is $21 now!?"
See this reddit post from today as just one of many many examples in the genre:
"How are people even affording groceries right now?
Tip/advice 💁♀️
Everything has gotten so freaking expensive. I find myself going to three different stores just to try to get decent prices. Meat/chicken is the only thing I “splurge” on anymore - as I’m buying from hyvee or Kroger instead of Walmart.
I feel like I am spending 70-100 for just me a week. And then I always have a few meals of eating out a week.
It never used to be this way."
https://www.reddit.com/r/Frugal/comments/15cvjns/how_are_people_even_affording_groceries_right_now/
I read that and posted in it. First of all, I always went to a few different stores to save money. There is a tool called a price book I always used (or can just use an app for it too I guess but everyone's price book will vary depending on what they eat/keep in the pantry). Anyhow, I don't need to use it much anymore because week after week, the items/best prices become memorized/second nature. I almost always buy loss leaders in the quantity possible and necessary for the next sale and produce according to season. The prices at some places are very high (like Wegmans). I also utilize a food buying coop to keep my budget down. I feel some places will have higher prices so long as they can get away with it and it is up to the consumer to let their wallet go walking and allow them to either adjust their prices or go out of business.
It’s totally rational. People are still poorer after a major inflationary event until their wages catch up with the inflation (which is still continuing albeit abated). That wages start to grow again doesn’t mean that everything is back to normal.
I find actual price levels to be a lot more real, and the reaction to them more rational, than extrapolating people’s feelings from cherry-picked charts. But that is just me.
But, there is more going on there than just inflation.
The following comments invite correction. This is just what I've heard from the news.
Part of the increase in the cost of any chicken product is the bird flu. Producers had to destroy so many chickens that it had an influence on the cost and that cost will remain high until those chickens are replaced through new generations.
The weather and fires have destroyed so much land that also affects costs. Draughts affecting grain crops will affect flour and so bread prices will be higher.
Labor losses caused by migrants not being able to cross the borders will affect how much produce will be harvested before it spoils in the fields. The work is hard and Americans aren't lining up to do the work.
The Texas' war on Mexico destroyed the avocado market. (I love avocados).
The supply chains and what's happening globally will affect food costs in the cold months as well.
All of this and more affects the cost of food.
That's true. People don't realize the savings they get when meat packing co. employees are undocumented aliens.
I think this is why there is a lag effect. People are mad about how expensive eggs are now. As inflation moderates, they'll get used to the fact that eggs cost $Y now and tend to forget that they used to cost $X a couple years back.
This is why I don't think it matters for Biden what people think about the economy *right now.* It only matters what they think in Nov 2024.
Where are the raises? Instead, folks are going to see pay cuts due to increasing taxes, inflation (another tax) and job loses. You’re looking at the past. Look over the horizon. Commercial real estate, escalating job loss, tightening of bank loans, and increasing criminal behavior. San Francisco a prime example.
This comment is almost the definition of vibes vs reality. Sadly, part of our negative polarization has lead to people wishcasting for the worst possible economic outcomes. That more than anything else is probably driving the narrative.
What tax increases? Mine haven't increased. You must make more money than I do.
Real wages are rising which is very straightforward. Employees receive salary/wage increases greater than increases in prices. Wasn't this way earlier when inflation was +9% and even higher. However, it's that way now. Plus, if an employee adapts to, say, become proficient at using AI, not even programming it, that employee's labor is much more valuable and she'll get paid even more.
Is crime still increasing in San Francisco? I thought that happened in 2020 and 2021 but it’s started to come back down.
Violent never went up in the first place and is still below 2019 levels and low compared to similar cities. Property crime has remained the same (high compared to other similar sized cities).
But who is responsible for crime in big cities. Generally the mayor. But the biggest cause of crime, seems to me, is two things: illegal addictive drugs and a proliferation of guns of all kinds. While drug smuggling could rest with lax laws promoted by Democrats, the gun problem sits squarely in the Republican camp.
Has payroll taxes increased?
That means the median person's paycheck is going farther. By definition one half of the people are doing worse than the median. And almost all of them have the right to vote.
If the median person is doing better, then that by definition is what it takes for most people to be doing better.
I often write succinctly and choose to leave out nuances, but I think we need an economy that works for more than 60% of the people. The bottom 25% of America is really suffering.
I thought they’re the ones that are actually in the most improving situation and it’s the top 25% that are having real incomes fall!
Let's assume that you are correct. In that case, the American lower classes are moving from a super awful experience to a very awful experience. If your annual income is $10,000 dollars, a 25% raise brings you up to $12,500. If your annual income is $15,000 dollars, a 25% increase doesn't get you to $20,000.
I consistently find that well educated people with numeracy, the kind of people who read this blog, who almost always have well paying jobs, simply cannot understand what it means to be poor. And, unfortunately that includes Noah. His focus is on the median. But there are two wings off the median— the wealthy who don't need our concern, and the poor who don't receive it.
I had a friend who was living on a $700 disability check + $180 In food stamps. Then they reduced his food stamp allowance to $80, because he started receiving Medicaid. He was recovering from cancer. We both thought that eating food is an important part of recovering from cancer.
Except real purchasing power is not higher than before, at least not for those of us who are low income.
I thought the low income brackets is where wage increases have most exceeded inflation.
You have to grant that the initial inflation period ate their entire wage increase, which kept them from falling back under the inflation but didn't give them any "breathing room". Landlords driving up rent costs ate whatever advantage they've gained in wage increases now. The housing market for investors is looking for greater profits and is making changes to the current housing stock that makes renting and housing purchases more expensive.
Purchasing power for what?
A car at much higher prices with a loan at double or triple the old interest rate? A 250,000 house with a 7 pct mortgage instead of 3 percent? Groceries?
Paychecks, yes, but (as indeed alluded to in your article), what about existing wealth? While mediated by a credit card because it's more convenient and offers more protections than cash, for all intents and purposes, I pay for groceries (and other purchases) out of my bank balance, not on credit - and inflation doesn't appear to have a uniformly positive effect on wealth held in equities (and obviously has a negative effect on the value of bonds other than, say, I-Bonds which are purchase-amount limited).
If you're accumulated assets, inflation would seem to have a high likelihood if being well approximated by "stuff costs more and you have the same amount of nominal dollars."
What percentage of people have seen their purchasing power go up though? Our expenses have inflated by significantly more than the CPI-U would indicate and our wages haven't kept up. That's not exactly surprising as CPI is not a real measure of any one person and we are somewhat higher on the income scale, but we have a huge advantage in that our housing costs have been more or less locked in with a low interest rate. The people at the lower end of the income spectrum who have had >5% annual wage increases I feel like are hit even worse by inflation. Anecdotes are not data, but it seems like more people are a little behind in purchasing power than not.
For people with financial assets that they keep up with fairly regularly, they maybe are being impacted by their drop in real wealth, which I think people tend to measure against the peak. Lots of people saw their wealth increase early through covid before the inflation hit, and even though the rise in asset value and inflation were mostly related and arguably should be seen as essentially happening at the same time, people feel like things were going well and they were "rich", and then inflation made them much poorer rather than thinking they were doing ok, then COVID spending drove a lot of paper wealth and also drove a lot of inflation that mostly netted out, and now they're still doing ok.
According to Atlanta Fed the median wage increase among the bottom 25% of workers (by income) and the next 25% of workers (so bottom half) is above inflation.
So we would think at least half of the bottom half had wage growth > inflation the last year, by a good amount.
Median wage growth in both quartiles since inflation started rising fast had kept up with prices.
So someone getting the median wage growth for low wage workers in 2020, 2021, 2022 and so far in 2023 has kept pace with inflation since 2020. Barely.
wages aren't keeping up with their monthly costs. They're not buying different stuff or getting better stuff it's just costing more for the same stuff. Think about replacing a tire. Think about the cost of air conditioning if you actually have it.
That's average wages.
If the top 10% of earners earn as much as the bottom half of workers combined then -2% real wage growth for the top 1/10th can counter +2% real wage growth for the bottom half, etc.
Median wage growth for 0-25% (percentile, by income) and 25-50% of workers has exceeded inflation for a while. It's also matched inflation since the pandemic.
Median even of a smaller slice isn't everyone of course, your mileage may vary, but it is the median experience of just those workers.
Their wages have been increasing faster than anyone else's.
https://www.nber.org/papers/w31010
Not according to the data I've read and is commonly reported. Those persons could leave their current roles and get hired elsewhere at higher rates most likely. Of all those you listed, how many do you know personally and know they've asked for higher pay? How many are union? I mean, if you don't ask, that's on the employee.
I wonder how much this is tied to the long extended period of quite low inflation (generally well below the 2% target). So, everyone got used to prices not changing much at all. So, when they went up, it was a bigger shock. Look at the inflation rate under Reagan in the 80s - noticeably higher on a regular basis than right now), but folks sort of got used to it.
And the price rises hit faster and quicker than wages going up. So, the period of unhappy dislocation.
Couple all that with the comments on upper middle class where the mindset is still that housing prices (and wealth) keep going up. Big burst in "housing wealth" in the last 5 years before now
Good observation. It's as if we experienced ~30 years of inflation in ~3 years or feels that way rather. Of course, that low inflation rate for much of the ~30 years was due to globalization which isn't entirely dead while it's pretty close.
Globalization isn't dead at all but it isn't expanding at the rate it had been. A very high proportion of our consumer products still come from overseas. That isn't globalization I don't know what is.
I'm not a globalization expert per se.
Given the threat China poses the USA as it seems every authoritarian regime with a modicum of power becomes, having them make consumer products as we move manufacturing to the USA and friendly countries, makes a lot of sense to me. I'm nearly certain, if I had to guess, that's the strategy in order not to decimate their economy built up these past ~30 years through globalization quickly; have them create non-geostrategically critical things such as consumer products and we'll create the geostrategically-for-national-security things here and at friendly countries. Hope it's enough to sate Xi for the time being, allow them to stand on their own and increase their domestic consumption, serve it as a sort of developed country. "Sort of" because I think we forget just how many persons in China live on poverty level incomes.
I've been looking and all the household goods that are in my house now were made in China. You have to really work hard not to replace household goods with something that is not made in China and don't count on Amazon to tell you where something was made.
I suggest you read Janet Yellen's comments in China on the issue of globalization (although she does not use the term.
She acknowledges that globalization defined as every country on Earth sourcing widely, and no one depending completely on home manufacture, is here to stay.
https://www.cnn.com/2023/07/08/economy/us-china-yellen-visit-presser-intl-hnk/index.html
Yes, I think decades of low-to-no-inflation left people psychologically unprepared for what a modestly large inflationary episode would feel like.
Economists were remiss in not making a bigger stink (hardly any stink at all!) about the Fed undershooting its inflation targets 2009-2020.
In fact Summers and others back then were pushing for massive fiscal spending to cure “deflation” and others pushed MMT…..and then we saw the fruits of that incontinence. Whoops
The Bush/Cheney regime shows MMT works as long as you pretend to oppose MMT. So for MMT to work you can never say that you support MMT because then people will expect you to print them dollars.
Disinflation vs. deflation is good go understand.
Not all deflation is bad, and much of it is good such as when electronics deflate due in part to Wright's Law.
Inflation or Deflation by Merle Hazzard and Bretton Wood:
https://www.youtube.com/watch?v=2fq2ga4HkGY
Why economists will not acknowledge that the economy is good I have no idea, but I know why the average person has a problem.
Inflation is deeply troubling—many of us spend a lot of energy trying to find low prices, and when prices go out of control, like $5 eggs and $5 gas, it's a shock to the system. And when economist tell us inflation is over, the prices are still way higher than what we were used to. And our wages probably have not gone up correspondently.
There's a similar problem with the term "recession." When a recession ends, that only means that the economy has stopped getting worse. It doesn't mean that all the damage done by the recession, especially lost jobs, has been repaired. The average person who's gone through a recession is still suffering significantly when the recession has been proclaimed “over."
Incidentally, the people who have the privilege to announce that an inflation or a recession is over, all have well paid secure jobs. That fact shows in their clothing and the serene look on their faces. That's why ordinary folks have trouble buying it.
What people forget is that inflation dropping does not also have to correlate with prices deflating eg negative percentages...they can just stop rising further at 0%, or slow their pace of increase eg 2-3%.
Especially when compared to other nations, the United States managed the Covid impact on the economy very well. Both the Biden Administration and The Fed deserve kudos for the job they have done. They will be taught in future economics textbooks.
The impact of the lockdowns created mass devastation and destroyed the health of hundreds and thousands of people, not to mention the low-trust society that resulted from the isolation. It could be argued that the economic shutdown was actually more devastating than covid itself.
I don't see this. It's not actually possible to do a counter-factual assessment of the damage that a no-lockdown policy would have caused, but the initial lockdowns appear to have had a strong impact reducing fatalities caused by combinations of Covid and hospital overload. The fatality rate for Covid declined substantially, which you'd have to count as saving hundreds of thousands of lives and as many case of serious/chronic illness, so holding that the lockdowns destroyed hundreds and [of?] thousands of lives tells me you're looking a statistics I haven't seen. What are they?
"Mass devastation" certainly does not describe anything remotely like life in the midwestern state I live in. Perhaps there are other areas of the US that are post-apocalyptic.
I agree that in retrospect, school closures went on longer than they should have, and created unnecessary learning loss, which was a serious error.
Agreed, other then school closures most "lockdowns" were "you can't sit down to eat in your favorite restaurant anymore" style restrictions. That caused some issues for sure but mass devastation and destroying lives? I don't see it
So what about people living in abusive situations with their spouses who couldn't leave their houses? People whose medical treatments were delayed? People who couldn't visit their dying loved ones in the hospital? People living in close and uncomfortable quarters with roommates? People with obesity and disabilities and who couldn't go to the gym or physical therapy? Just because a demographic is invisible doesn't mean that it doesn't exist. Are we looking at society on a larger scale here or just zooming into the affluent?
"couldn't leave their houses?"
Like I wrote there were no lockdowns like that in the United States, you are thinking of China maybe? If people couldn't get medical care obviously that's bad but I'm not going to pretend people living in uncomfortable conditions is having their lives "destroyed"
Did you live in NYC or SF during the lockdowns? Perhaps you weren't in either of these cities. Now imagine any victim of spousal abuse having nowhere to go during this period. Did you try getting medical care for a serious illness during this time? Now imagine people who were already next to death trying to get medical care for something besides covid during this time. Tell the mother who couldn't see her son dying of cancer in the hospital that her life wasn't destroyed. Tell the people who were evicted from their homes as the cities were shut down that their lives weren't destroyed. When you shut down the economy you shut down human life. Not everyone had the resources to pull through.
And in fact the US did a much better job of mitigating the economic harms to small business owners and their former employees than many other countries did.
But more people died from Covid than in other advanced countries. North Carolina got the balance the best which means Florida could have had 20,000 fewer Covid deaths with a strong economy had they just done the mitigation measures implemented in NC.
ok, so where in the USA were people physically locked inside their houses and couldn't get out for *any* reason?
NY had 900 deaths per day from spread prior to mitigation measures and never got close to that over the course of the pandemic once mitigation measures were implemented. So that’s essentially a 9/11 over 3 days in NYC without 15 days to slow the spread.
Not quite sure what prior point you're addressing Pangolin, but if it's the appropriate use of "mass devastation" I think New York in those days might justify it. Ms. Haywire was using the term to characterize the consequences of the mitigation measures that brought an end to the city's initial crisis.
The initial mitigation measures were appropriate under the circumstances. Just allowing time for the medical community to develop best practices for treatment saved tens of thousands of lives which meant 15 days to slow the spread was necessary.
Obviously Hawaii did the best with mitigation measures because it doesn’t have an interstate running through it and so it could test people arriving on planes. The Florida Keys shows that just being difficult to travel to greatly mitigated spread of Covid and so travel restrictions definitely reduced Covid death rate.
I personally believe the states that found the best balance were the few red states with Democratic governors that continued to allow cities in their states to implement mitigation measures which reduced spread which can be seen clearly when comparing Covid death rates with the adjacent states they are generally compared to. So Florida could have had a significantly lower Covid death rate had DeSantis done what Cooper did in NC.
I'm not sure we can trust numbers coming out of China or other authoritarian countries given their general opaqueness. Still, we did have a unique problem in this country handling the crisis.
Population age, diabetes and obesity.
That said, I'm certainly on the side of "US NPIs were overdone."
Good point, Slaw. Our response was terrible. But John E is right that accurate numbers would probably lower (in the good sense) our comparative profile seriously. It's not just authoritarian countries like Russia and Belarus: low income countries such as India and many African states clearly had vastly inadequate reporting infrastructure. One thing the US seems to have done exceedingly well is to count and centrally report cases and deaths.
But a disproportionately ineffective response doesn't equate to "mass devastation," as can be proven by walking around whatever city or town you're in. what was terrible about the US response? And bear in mind that this non-existent mass devastation, according to Rachel Haywire's comment starting this string, was not caused by Covid, but by lockdowns.
How is it non-existent? Please see above. People could not see their dying loved ones in the hospital or go to the gym when they were disabled. They could not leave the house to get away from their abusive spouses or roommates. A woman was stopped in the streets of San Francisco for jogging. NYC businesses closed, all at once, without any real warning. Hospitals that were treating non-covid related illnesses were overloaded and postponed treatments for thousands of people in need. These people may be considered outliers because they have a low SES, but we need to account for the full picture.
Yes. People could not see dying loved ones (especially the case in nursing homes and hospitals, as I well know) or go to the gym. Restaurants closed. And now I know a woman in San Francisco was stopped for jogging. (In my town, women still fled abusive husbands and were taken in by the local shelter, but perhaps not where you live.) If you consider these things to be "mass devastation" I have to wonder what term you would use for cases where there is truly mass devastation, such as the destruction of Bakhmut.
And what caused these things--apart from the jogger, perhaps--was not lockdowns but Covid. If people had visited dying loved ones some proportion would have spread the disease to the loved ones of others; if they had gone to the gym they would have carried the disease home to loved ones; if dining had continued as usual the disease would have spread to more people than it did. Making those avoidable deaths happen in addition to those that did would have brought us closer and closer to true mass destruction.
And as someone who had to postpone treatment because of Covid I have to wonder, what does SES have to do with this?
Slaw, Am I wrong here? To say that something is not "mass devastation" does not suggest in any way that it is therefore not an issue.
If you want to set the bar for "mass devastation" at one million lives lost in a country of 300 million then I can only accept the use of the term. For me the term connotes Hiroshima or Fukushima.
And recall that Ms. Haywire was not talking about deaths, she was talking about lockdowns.
This view ignores that there were no actual “lockdowns” in the US and that business would have still fallen off a cliff in a world where the US governments just ignored Covid and did business as usual. It might have been over more quickly, and probably with significantly more deaths, but it isn’t like people watching what NYC went through on the news weren’t going to change their own behaviors in the aggregate.
Too many schools stayed shut for too long, causing significant social and academic learning challenges for kids. A primary reason was that indoor air quality was not properly addressed both physically and informationally. Many schools should have been opened back up much earlier than they were with relatively low cost. My spouses school reopened for half-time school in October 2020 and full-time school in January 2021. If the CDC and schools were on top of it, they could have fully re-opened for the entire 2020-21 school year. But the air purifiers were only starting to be delivered in October 2020 in her school. I had already purchased two for her classroom in June 2020 once it became clear that would be a major contributor to safe reopening.
I haven't seen evidence of any other significant government-imposed closures after the initial month or two in 2020. Studies of credit card spending, etc. showed that people were shutting down their forays outside their home before any government edicts required them to. Similar to schools, much better communication on improved HVAC, including widespread use of standalone air purifiers, would likely have greatly improved the public's confidence in dining out etc. once vaccines started to roll out. Even now, I use a CO2 monitor to check public spaces and most are still pretty bad (including internationally known venues) for indoor air quality which is an issue for Covid, flu, RSV, and other respiratory diseases. I wear a mask to some performances and avoid some restaurants because of real-time measurements I do, similar to dealing with wildfire smoke. We have the opportunity to substantially improve our ability to avoid large waves of respiratory diseases, but public health agencies are largely refusing to acknowledge or publicize it.
I don't even think it "could be argued" anymore...
Yeah it was actually the Trump administration which was responsible for the earliest measures to inject liquidity into the economy. Don't forget Dems pouring trillions onto an already hot economy in early 2021 with the American Rescue Plan Act which led to the inflation we experienced. That experience has unfortunately tainted everything else the Biden administration has done since.
"Yeah it was actually the Trump administration which was responsible for the earliest measures to inject liquidity into the economy."
https://babylonbee.com/news/trump-unveils-much-simpler-stimulus-plan-giant-money-cannon
ARP/IRA did not cause inflation. The Fed caused the inflation going on too long. Some inflation was good and necessary to allow the economy to adjust to COVID/supply chain shocks.
I think the low rates continued for too long. With the large tax cuts of the Trump admin, there should have been a corresponding rise in rates-- nothing crazy but a rise nonetheless.
Managed LESS BADLY than many other countries. Vaccine roll out was too slow. There was no asymptomatic testing available until way too late, Vaccine messaging "it's safe" rathe than "its effective" was a disaster. CDC provided little guidance to decisionmakers about how to craft cost effective NPI's for their specific locales.
I agree that the Fed deserves kudos for management up through mid 2021. Then it went off course by being too late starting to bring inflation down and then may have brought it down too quickly. If there really is no recession this criticism will be wrong but post 2021 kudos are premature.
"Vaccine messaging 'it's safe' rathe than 'its effective' was a disaster."
I'd say the messaging that the vaccine only works if everyone gets it was a bigger disaster. I've had my share of tetanus shots in my life, and never was a told that they won't protect me from tetanus unless everyone else (or at least all around me) also get tetanus shots.
Tetanus is not an airborne virus that is coughed out and breathed out by human beings. Tetanus is a bacteria that lives in soil.
The COVID vaccines had only a small impact on the transmission of COVID; they had a giant impact on how sick you became.
The messaging on vaccines was abysmal. The mRNA Covid vaccines are a major public health triumph. There are very few vaccines (effectively can be counted on one hand) that truly eliminate getting sick at all for 90%+ of the population. A vaccine that is 50% effective at preventing the disease at all and is 90%+ effective at preventing hospitalization is a massive success. Most diseases are still around because of the difficulty of creating a vaccine for them, not delivering it.
The "too fast development" argument was utterly bogus. mRNA has been researched since the 1980s for use as a vaccine. The big breakthroughs in making it usable were almost 20 years ago. The reason it hadn't been used yet is that the common vaccines already had massive supply chains, so they were working on really difficult vaccine problems like cancer and HIV for mRNA use. The delivery vehicle was already in place when Covid showed up and Covid was relatively easy to develop a vaccine for. It was essentially just a case of dropping a different engine into an already designed car.
Most vaccines typically start out as a killed or weakened virus. Sometimes a surrogate (e.g. cowpox instead of smallpox) can be used in the early days. It often takes years or decades to move onto safer alternatives. That is the brilliance of the mRNA vaccines - they can be coded quickly to mimic non-dangerous parts of the virus thereby skipping a decade or more of less safe vaccines.
Most of the "traditional" Covid vaccine development approaches crashed and burned due to many of the same challenges vaccine development and production has had over the past century which is why there was so much focus on mRNA development in the first place.
No, they went through a normal testing period, but it was unusually easy to collect test data because there was a pandemic, which is why the trials ended quickly.
Certainly. That's what you do in an emergency: cost/benefit trade-offs based on best available information. Our ordinary drug testing regimes are maximally cautious as a result of past instances of catastrophic mistakes (thalidomide being a major prompt). Catastrophic cases are rare but . . . catastrophic, so we give them great weight. But when the prospects of a pandemic are catastrophic, both in terms of health and social wellbeing, we make a conscious choice to cut corners, given that the odds of any one drug the survives short-term trials being toxic are low. It was a low-risk gamble, and we won.
"Tetanus is not an airborne virus that is coughed out and breathed out by human beings. Tetanus is a bacteria that lives in soil. "
I know. My point was that tetanus shots may offer me - personally - the guy getting the shots - protection against tetanus, but it has nothing to do with other people. They can get the same shots themselves, or not. Up to them. I don't demand they be fired from their jobs for not getting one. And I don't demand everyone around me have a" tetanus vaccine passport"
"The COVID vaccines had only a small impact on the transmission of COVID; they had a giant impact on how sick you became."
This was my point about the messaging. The zeal to fire and socially ostracize anyone not CVOID-vaccinated did a lot of damage and for what purpose if they had such a small impact on transmission? A elderly or otherwise vulnerable person may be foolish to not get the shots, but we don't need to ruin the lives of younger non-vulnerable people in all other aspects just because they make a decision different from the one I would make. Anyway, that's my opinion on COVID shot messaging.
". . . for what purpose if they had such a small impact on transmission?"
The purpose was to prevent transmission. The information that it did not have as large an effect on transmission as believed came later. Your argument relies on hindsight. When making critical decisions, the general rule is to choose the option with the best cost/benefit ratio based on available information. That later information changes the calculation does not mean that the initial decision was the wrong one to make.
It is also not correct to say that vaccines had no effect on transmission: you are less likely to contract Covid from exposure to vaccinated people carrying low virus loads than from unvaccinated people whose virus loads are unchecked by antibodies. This mattered most to those who unable to be vaccinated, either because of medical conditions or because their general low-risk profile kept them out of vaccine eligibility during the rollout.
I think it's correct to say that vaccine mandates appear excessive in retrospect in most cases. However, having grown up seeing the universal relief that the polio and MMR vaccines brought us in the '50s and '60s, and the way those major diseases were virtually eliminated in the US, what seems more perverse to me is that the fiction of vaccine danger and the force of political opposition to the incoming administration led to widespread vaccine resistance in the first place.
Maybe you remember things differently than I do, but my recollection is that it became very clear that the shots did not stop transmission by the middle of 2021. Yet, all the "appear excessive in hindsight" mandates continued well into 2022, some into 2023. such as the "travel to US requires covid vax" rule.
"It is also not correct to say that vaccines had no effect on transmission: you are less likely to contract Covid from exposure to vaccinated people carrying low virus loads than from unvaccinated people whose virus loads are unchecked by antibodies"
The crux of the biscuit. Just too many examples of vaccinated people getting and transmitting covid made people discount this notion.
Sorry to drag this into yet another covid policy circle-jerk. It's not the purpose of this blog or this article. You made a comment about "messaging" and my opinion is different than yours as to what part of the messaging caused the most harm. Yes, the "must get Trump" politics followed by the "I resent how you got Trump" politics didn't help.
A major purpose was also to prevent the hospitals from being overwhelmed which was causing mortality in its own right. People who refused to be vaccinated, got sick, and went into hospital sucked up massive resources that caused problems for many other patients who had other health problems. There is a tragedy of the commons issue with that aspect alone. The large number of excess deaths the US had in 2021 and 2022 were not just Covid deaths, but other deaths as well. Many elective surgeries for improving quality of life were also postponed for a long time because Covid overwhelmed the medical system.
I think there is no good evidence of how the messaging affected responses, and from where I was looking the message of "it's effective" was extremely loud. The only reason "it's safe" became a headline was because of a systematic campaign that claimed "it's more dangerous than Covid," a campaign that still won't quit.
Kathleen Weber responded correctly to the comparison to tetanus. Your point would have worked if you'd used, say, the smallpox vaccine as your example. The message that the vaccine "only works if everyone gets it" concerns stopping pandemic spread, not individual vulnerability.
"The message that the vaccine "only works if everyone gets it" concerns stopping pandemic spread, not individual vulnerability."
My point (apparently not well-made) was that tetanus shots have nothing to do with transmission, and neither did the COVID shots. But they were hard-sold that they would stop transmission. Hence, firing/ostracizing people or otherwise restricting their lives became very fashionable.
Once people realized that the COVID vaccines did not, in fact, stop transmission, it made it a lot easier for them to wonder what else they were being mislead about = greater mistrust of safety/effectiveness, which was highly destructive.
If Pfizer and their government mouthpieces had simply said: "This vaccine will offer you protection against severe COVID, but not immunity to getting or transmitting it, the ensuing fallout would not have happened, since there would have been no false advertising to begin with. A messaging problem ....
The vaccines did reduce transmission. Agreed this is not the same as stopping. They also allowed much more social interaction with much less consequence. It is very clear that hospitalization and deaths dropped dramatically with vaccine recipients despite them participating much more in public setting than before the vaccines.
Vaccinated people had a much better chance of not being infected at all and were likely to be infectious for much shorter periods of time with less severity. That reduces R0 in its own right.
Recent studies indicate that about a quarter of the population has never been infected by Covid even though over 95% show antibodies to the Covid virus or the spike protein. The vaccines clearly prevented a lot of infections of any type. This is probably far better performance than you would see in the population for the various flu viruses or the common cold. https://thehill.com/policy/healthcare/4079515-cdc-2022-almost-quarter-did-not-get-covid/
My wife and I were vaccinated and still got it. I have no idea if the severity was decreased, since this was late 2021, and the punch packed by the then current strain had substantially decreased. I'm not saying the vaccines were ineffective; I just think the messaging should have been more honest. Even "we don't know" would have been more honest.
But it was known that the vaccine neither prevented infection or transmission, but Biden was loudly and falsely proclaiming that it did, even going so far as to pressure Facebook to not allow posts pointing out that lie. The only vaccines that should be even partially mandated should be for vaccines that stop transmission and in that case only for public school children.
The vaccine did prevent infection and it did prevent transmission, but it did not prevent infection in all cases and it only prevented transmission to a moderate degree. What it did overwhelmingly well was to reduce the likelihood of necessary hospitalization and almost eliminate the risk of death.
What is the message a president should convey publicly during a pandemic emergency given those facts (recalling that some of the less elements, such as that transmissibility was not eliminated emerged only gradually)?
And what was the actual content of those Facebook messages. Were they saying, in essence, "You can still contract Covid, though with milder results, and it can still be transmitted, though somewhat less likely," or did they say, "The vaccine is ineffective and itself more dangerous than Covid?"
“Prevent” is a high bar that *no* vaccine reaches. “Reduce” is the real measure.
Is it really not worth it to reduce the frequency of four or five days of being very sick? I would much rather have COVID once every few years than have it every year, given the experience I had when I had it, even though there was little risk of long-lasting harm.
I'm not sure what "not really worth it" means. I know young people who contracted Covid early on, and although none died, a couple encountered "long Covid": it would have been really worth it to them to avoid the disease.
That's anecdotal, of course. For your point to be valid there would need to be data comparing the likelihood and severity of negative consequences from the vaccine and from contracting Covid for people in that cohort. I don't know of any such evidence, and would welcome seeing it.
You need to post some real proof that the vaccine is more dangerous than the disease for some cohorts. Everything I have seen with actual data attached points to the opposite conclusion. Based on current data, it is less important for some cohorts to be vaccinated, but to say that the vaccine is more dangerous than the disease is a totally different argument.
There was no such messaging of "it's safe" rather than "it's effective." The message was always that it was safe and effective. (*Every* appeal to people to be vaccinated included a statement that it would increase personal safety, and the rollout by age group was always rationalized as prioritizing personal risk-reduction, not "herd immunity.")
I agree that the rollout was too slow (though government financing and development was astoundingly fast). Given that we knew a vaccine was likely coming by mid-2020, better logistics could have been put in place. (I have no familiarity with NPIs; perhaps your point is valid.)
At what cost, another bank closing. Who bails them out? Taxpayers in higher taxes for the free money presses.
I hope the future economics textbooks describe the 10s of billions of dollars handed out without even basic verification which has not only caused most of that money to be lost fraudsters but also contributed to the debt and inflation. And Noah didn’t mention the national debt at all, being a Biden shill as he is, which will now be bigger problem since all that new debt comes with much higher interest rates and since spending is not being cut to compensate even more debt will be added on to the downward spiral.
The problem in 2008 was that there were so many anti-fraud controls that much of the money didn’t get spent until three or four years later, and so the economy had a long low patch. The COVID money was done right, where we accepted a bit of fraud and inflation as a reasonable tradeoff to prevent a major recession and resulting mass unemployment.
I think the underlying logic here is really important. We confuse the imperative to punish known fraud with an imperative to avoid any possibility of fraud by providing no support. Fraud and corruption are negative aspects of any functioning polity. It's important to address them with controls, monitors, and sanctions, but if your sole criterion is to avoid them the polity cannot function.
I completely disagree. The size of fiscal stimulus put into the already recovering 2021 economy (nearly 15 pct of GDP between Dec 2020 and Q1 2021 handouts) was grossly irresponsible and unnecessary and supported by zero economic analysis from Yellen. Pure vote buying that instead helped trigger a global inflationary spiral and mismatch between goods consumption and production. The Fed insanely listened to some of the pro-MMT/ “run the economy hot” types, perhaps in part so Powell could get re-appointed and foolishly accommodated (probably spurred) inflation, engaging in QE and ZIRP in a too hot economy.
This was a huge policy error by Biden, Yellen and Powell (and Brainard and the Fed econ staff that Yellen hand-picked). They all should be sacked asap
America wasn't an outlier. The Australian and New Zealand economies managed very well also.
Because we converted a potential huge unemployment shock into an inflation shock instead, which is much easier to deal with, and has fewer long-lasting consequences.
I think there is a fifth element folks want from the economy: Stability and predictability. All this economic chaos reframed as business cycles is very unsettling to the common household trying to provide for a decent life, and plan for a dignified retirement, and leave a bit for the kids.
I totally agree. A significant patch of inflation, whether in the 1970s or the 2020s really wrecks your sense of stability. It's much more painful than economic policy makers seem to realize.
Ok, so you're describing an already comfortable household which is scared bc inflation is eating the purchasing power of their too-good-to-leave jobs and probably very mad that their mortgage payment increased significantly.
Not to say these ppl don't matter, but just to put things into context, most people don't want stability (which just means *being stuck* if your situation is not so great), they want *progress*.
And this economy delivered it! Now you take a job from a company that once would not have deigned you of an interview, and if you don't like it, you just look for a better one! It's great, not only in terms of material comfort, but also psychological one. Finally precariety is the company's cross to beat, not the workers'!
I wish we could have done it without destabilizing so much the life of the already settled down, but in utilitarians terms, it's clear more people are better off than before
This seems right. Here are some anecdotal reasons why it subjectively "feels" like the economy is bad in my own life:
- The grocery store in my neighborhood, which was open until midnight for more than a decade, now closes at 10. The deli is rarely open even during posted hours. Often there is no one running a regular checkout line, and usually half the self-checkout lines are closed as well. The formerly 24/7 supermarket a little further out is now open until midnight only.
- Many restaurants are closed one weeknight a week. This was unheard of in my town until 2021.
- It's impossible to get an appointment to see my primary care doctor less than a month in advance, and from what I hear trying to find a new one is even more impossible.
If these reflect broader trends, it could be that the labor market isn't at equilibrium yet--wages might need to rise further (with more inflation consequently?). Or maybe the service economy is just going to be providing worse service to the consumer from now on at the new equilibrium.
Your experience is similar to mine. Restaurants are closed at least two days/nights a week, and have more limited hours when they are open. We are told this is due to labor shortage, not lack of customer demand. We are told the labor shortage is because there is no affordable housing for people who work these jobs. This is the same in both places we live (we split between Wydaho and Kauai), although it is worse on Kauai.
I've had a hell of a time getting a new crown on a tooth because my (highly competent) dentist is booked for months on end. Can't even schedule a cleaning less then 7-8 months out. I can't get an electrician to bother to come over for a small job. They all want the big bucks in new construction. I can't get a roof vent fabricated within two hours of the house for the same reason. I will say this, the demand for anyone in the skilled and semi-skilled construction trades is sky high in Wydaho and on Kauai. New construction and remodels happening all over, and waiting lists of a few years for builders.
Yean yeah, anecdotal. But as another commenter says, it is my lived experience which apparently makes it universally true according to some folks.
Labor participation rate for the core working group of 25-54 year olds is effectively at or close to all-time highs: https://fred.stlouisfed.org/series/LNS11300060
We are largely out of workers. The primary extra work force left is the retirees coming back to work. As the Boomers age, that available work force will quickly diminish.
Historically, the US has used immigrants to fill these gaps. US immigration policy is broken and is not allowing many in. Many companies have relied on illegal immigrants to perform construction and hospitality work. States (e.g. Florida) have been passing laws to make it less enticing for companies to use those workers, which means those employers are now trying to figure out where to get workers. Registered asylum seekers have long waits for their hearings. In the meantime, immigration law doesn't allow them to work so they sit on their fannies when they really want to be working. The US is choosing to restrict the work force.
Something I've really learned over the past couple years is the extent to which certain middle-class/upper-middle-class amenities rely on a large pool of cheap labor that has now, to an extent, dried up. To be clear, I think this is great, but I do think it lowers quality-of-life in some visible ways.
The most obvious thing are the much more limited hours many restaurants are keeping post-covid. If you want to go out to dinner Monday night in my neighborhood, your options are extremely limited right now. Late night dining has been obliterated.
You can also feel that fast-food service quality has declined significantly while prices are way up. Lines are longer, quality is worse, and things are just more likely to go wrong. This is starting to stabilize and get better as major chains are deploying some fancier technology, but it's still often a worse experience than I remember pre-pandemic.
I take these sorts of changes as being evidence of a good economy. But I can easily see how someone who doesn't think about it as much might take these sorts of things as a sign of a bad economy.
Yep. If a fast-food joint loses 2 of its 20 employees due to a tighter labor market and more customer tantrums, and that inconveniences 100 SUV drivers in Oakleys who want the drive-thru to be as snappy as it was 4 years ago, the complaints of the 100 SUV drivers are louder than the "Yippee!" of the couple of employees who got to become bank tellers or Pre-K teaching assistants or whatever. Same kind of fallacy as thinking "HELP WANTED" signs must mean the economy's sinking.
I think we just also need a grumpy lag.
Only just now has inflation cratered and the recession been called off.
People's views might lag as much as shelter data.
Is it safe to say vibes are a lagging indicator?
Definitely.
Also, there was real emotional trauma that occurred over the last few years. People feel pessimistic about the country, the world, and their lives, and they let that color perception of the macroeconomy.
A good economy would look exactly like this one but with about half the cost of housing.
Its not hard to see why new homes are more expensive. They are substantially larger than what were built 40 years ago despite family sizes shrinking. Try and find a new 1,000 sf-1,500 sf starter home anywhere in this country which would have been normal 40 years ago. https://www.statista.com/statistics/529371/floor-area-size-new-single-family-homes-usa/
Permitting and zoning requirements are forcing new home construction to be unaffordable. Smaller lots, smaller homes, more multi-family housing with less permitting hoops and much of the affordable housing crisis vanishes. The village next to my housing tract refuses to allow multi-family housing to be built even though it would replace abandoned industrial buildings in a walkable community. The people those apartments attract could be workers in the stores on main street with the "Help Wanted" signs up in the windows.
We can dream but I'm not sure that's really possible. Consider that even if housing is much cheaper, there's still only a limited amount of goods and services our economy is capable of producing. Housing prices going down would free up a lot of money but not necessarily drastically increase production, which would push prices up for all non-housing goods.
That's fine, it would still have people paying less on housing as a percentage of income and would help with the smothered feeling. I should really have said with 2/3rds the cost of housing, I know people in CA who are paying close to 50% of their income on housing. That just hurts, even if the money left over is still enough to afford nice things. It just creates this amorphous feeling like you are being stolen from and that the whole thing is rigged against you. Getting that down to a third of income would almost certainly do a lot for the vibes.
People feel the economy is not doing well when they see boarded up businesses wherever they go. (I'm fine, but my neighbours have gone bankrupt.) What's the vacancy rate for commercial businesses these days in the USA, and does it vary a lot depending on where you are? Anecdotally, I read that Americans are moving to the suburbs (where they need new commercial business buildings) and working remotely a lot more, which would leave the cities with a lot of empty commercial buildings that are unlikely to find tenants any time soon.
You know, there were a bunch of small businesses in my suburban town that did not survive COVID. But now there are new small businesses moving into their previous shops/buildings. Also the restaurants are now increasing their hours and opening for lunches again.
I’d recommend not celebrating too early. There’s a tsunami of consumer debt accruing at 25% compounded, commercial real estate is in dire trouble, the stock market is overvalued, and real life goods like gas, energy and groceries are sky high. You may think things are better because you don’t live in a world where your necessities are 30% so you have to charge basic needs. Recent data shows consumer savings is pretty much tapped out.
“The fact that Fed-induced curve inversions have presaged recessions 100% of the time in the past is never respected. Always a case of hope triumphing over experience. Thing is — very rarely do recessions occur in the same month as the onset of the inverted yield curve. There are lags, and that typically can be a year or longer. Think back to 2007. But like the story of the boy who cried wolf, the wolf did show up in the end.”
-Jesse Felder
Was the 2019 curve inversion a prediction of COVID?
https://www.linkedin.com/posts/david-rosenberg-40800219b_i-said-when-the-fed-first-started-hiking-activity-7090374965832613889-mo2N?utm_source=share&utm_medium=member_ios
https://www.zerohedge.com/markets/investors-go-all-soft-landing-narrative
You will never learn anything useful reading zerohedge. It's just Russian cope now.
That article is just a compilation of people who believe soft landing is way too early.
Wages have gone up faster than inflation for the bottom quartile. There has been a huge shortage of employees for those jobs. Amazon and Starbucks offer benefits now.
Not when inflation doesn’t track what the bottom percentile really uses the most: groceries, energy/gas, housing.
Exactly...it's very disingenuous to say inflation is down while ignoring sky high prices on the basics people need to survive
I've always been a low income earner. The last few years my income has been about 29k annually. Even though low income I've been fairly smart and own a home and a rental house. I'm 65.4, still work almost full time, and have not taken social security yet.....trying to hold out at least until full retirement age of 66.8. It's been harder for me to buy healthy food than ever before in my life. You say inflation is going down, but prices at the grocery continue to rise. My costs for electricity and insurance have gone way up for the last few years. I live paycheck to paycheck with a very small cushion. And if I hadn't been at least a little smart with my investment in real estate I can't imagine what my life would be like. And there are MANY people in that boat with no hope of ever owning a home at this point...and that's been THE major investment for the majority. And from what I hear about the rise in cost of materials for manufacturing we are going to see some severe inflation as those price increases reach the consumer. As an example some materials for making car parts are seeing a 1000 percent increase. I'm sorry, but you do sound like a shill for Biden.
In tech, it's particularly messy. I'll speak to the handful of areas I've analyzed: semis, Big Tech, and VC markets.
Semis existing in this super-position of extreme demand in some areas, but massive questions about how these fabs will actually get filled. Yes, AI is hot, but NVIDIA doesn't actually use enough wafers compared to consumer applications like the iPhone to keep a fab completely utilized. As consumer sentiment wanes, it's forcing semiconductor manufacturers to question their growth strategies at the same time that the US government is providing massive subsidies to build new factories here. The result is a strain on the labor force: sales and marketing is getting layoffs and trying to find hot areas to stay, while engineering and manufacturing are working especially hard to deliver fabs that may or may not be used.
Big Tech has gone through its "efficiency" stage, shrugging off a huge amount of people. There are just permanently fewer Big Tech jobs (at least on the growth side), and the startup ecosystem can't absorb them all. These orgs may still be shedding jobs (Google is still perceived as being overstaffed) so it will be a while until they start staffing up again. These were extremely well-paid jobs with cushy benefits (and questionable productivity) that are just gone. Anecdotally, the people I knew in this situation have gone to more traditional companies (grocery stores, hotels, etc.) trying to figure out their digital media strategy. I am curious how the Big Tech growth playbook shapes those companies in the near future.
Lastly, there's VC and startups in general. The short version is that the VCs had less capital to deploy, so capital that flowed like water in 2021 is now a streetfight. Worse, they all are raising at the same time with worse valuations and terms. 2021 was insanity for startups, with a glut of new companies raising at insane valuations. Typically they would raise 18 months worth of capital, meaning they would all be looking for new capital by mid-2023. In the intervening months, the Fed raised interest rates, which put a chill on how much capital flowed into new VC funds, such that there are fewer deals. One deal tracker put Q2-2023 as the worst quarter for startup dealmaking ever observed: https://twitter.com/AngelList/status/1684594617629503488?s=20. It also closed the "IPO window", such that more established companies looking to exit via IPO either can't or shouldn't (the price would be worse, can get capital elsewhere, etc.). The result is fewer companies, jobs, harder to start a new company (in anything but AI), and no liquidity from any work at those existing startups. VCs have predicted Big Tech would start acquiring them in Q2-Q4 of this year, as companies ran out of cash. Considering how tech has powered the stock market, it's also reduces potential investment opportunities, though I expect the best still make it to the IPO window.
I think it's fair to roll many of these anxieties into "upper middle class people are less well-off" which describes most of the issues discussed here. But I expect we have not fully reckoned with their implications yet. If the CHIPs Act spurs a bunch of empty factories or factories too expensive to turn on, the shortages of workers is going to reverse overnight. Will there just be permanently fewer paths to upper middle class lifestyles with fewer Big Tech jobs? Does something replace that? Is there just a missing class of tech companies or do they get pushed to a glut hitting the market as soon as Wall Street sentiment shifts? Are they productive in the mean-time, or do they have to sell and big companies either absorb their benefit or erase a potential competitor for a while?
Curious - have med device start-ups faired any better than others?
I don’t really know medtech startups. I have an acquaintance that is doing neurotech investing who is actively investing, so that’s hot. I know sleep apnea has surged as the US population ages. Beyond that I’m just guessing, which I will! It always exists in its own bubble as many have to go through regulatory approval and the technical diligence required is so different from the rest of tech. I could see it proceeding at its own pace, getting a bump from anyone that’s leveraging AI, but I expect it’s down from 2021 levels because everything is.
Thanks for the reply. I am a long-time SV patent attorney. My career transitioned from semi-conductors to med device somewhere along the way. I've ben involved in a lot of investment IP due diligence of med device start-ups, on behalf of both VCs and acquiring Big Med corporations, as well as on behalf of individual start-ups. I have heard grumblings from the later group that it was getting difficult to get into those round Ds and Es (and Fs and Gs) that it takes to get through all of the regulatory, but I have not seen any impact on my workload, maybe because I am in the process of slowly reducing my workload to zero in the not too distant time frame.
Behold! An “okay” economy is when there are lots of high-paying job openings. A “good” economy is when I in particular have lots of high-paying job offers
I can share my personal perspective as someone who is objectively doing "well" but losing ground relatively speaking. Contrary to most respondents, I think that the overall economy is good (based on reported stats) but my own personal financial situation is declining and this colors my view of Biden making me less likely to support him.
1. Averages are just averages. Some professions see different rates of pay increase. CMS has been cutting medical reimbursement rates for several years now. In my field of medicine, we've seen a 25-30% effective pay cut since the start of the pandemic, meaning that my colleagues and I have to see more patients, work more shifts, or do more procedures just to tread water. My group has had stagnant nominal (!) pay for 5 years and workload has increased by about 15%. This has led to a lot of disgruntlement. Some are even leaving to become coders.
2. Each person experiences inflation differently. Again, averages are just that. My situation is probably not unlike a lot of people in that my basket of household consumption changed drastically during the pandemic. The first two years we experienced a lot of the goods inflation and shortages (cars, computers, consoles, appliances). Then this past year our spending has shifted like most people to be light on goods and heavier on services - car repair (60000 mile checkup without repairs cost me $1000), dental work, travel, entertainment, AC installation (quote $30000). Coincidentally, the timing corresponds to service inflation taking over for goods. Essentially we've seen 3 years of 7-10% yearly inflation just due to shifting composition of spending.
3. In addition, just like many people we delayed having a kid the first two years of the pandemic and just had our first child last year, just in time to experience the high cost of child care (another service) - $3000 per month where we live. We've had to cut back on other services such as landscaping and take over doing it ourselves to make ends meet. Another source of worsening quality of life.
4. Wealth effect. I live in a heavily blue urban area on the west coast. I bought a house in 2018 and sold it early this year for about a 15% total gain. That sounds good but it's actually just breaking even after factoring in property taxes each year, repair/renovation costs, selling commission, and inflation. While there are some contributions from remote work, I also blame BLM protests and defund the police movements (both Dem adjacent things) for ruining the urban desirability of my area and affecting my home price.
5. Wealth effect part 2. The stock market has gone crazy this year but like a lot of people I sold most of my stocks and went heavily in cash at the end of last year expecting a recession, therefore missing out on the boom this year. My industry is also very defensive not cyclical so I obviously feel some disgruntlement that the excessive stimulus of the past few years has prevented a recessing which helped everyone but me.
6. The political dimension. Biden's policies have helped the working class but the upper middle professional class has not seen real wages catch up to pre-pandemic trendline. The professional class is part of the democratic base and has good reason to be disgruntled. The working class is largely populist/Republican base and Biden's efforts to poach them have not yet borne fruit. These people are probably out of reach and even if experiencing good times personally, are loathe to attribute it to Biden. In short - working class will respond negatively to economic surveys due to partisanship and professional class will respond negatively to surveys due to actually losing ground - which equals low approval ratings from both Dems and Reps.
7. State level factors. West coast blue states and cities are increasing taxes. WA passed a new payroll tax and a gas tax hike. OR passed several local city/county income taxes (Salem and Portland). Gas prices have stayed $4+ in the NW even as crude oil prices have come down. Yet another area where we're being squeezed.
So in summary, averages are great, but they can conceal a lot of variability at the individual and sector level.
The population of Portland and Salem (my birthplace) are uber-majority Democrat, and Democrats like higher taxes. They say this out loud, so it's not like you were not warned. It must drive the Proggy-arm of Democrat Oregonians that there is no sales tax, even though this is a regressive tax. If only they could institute a sales tax that only hit the evil rich people. Hmmm. Must be working on that. Maybe they can monitor your bank accounts and tax you based on all withdrawals?
I live in NY. I think we are if not the highest taxed state, at least the second highest. We have a sales tax which varies by county for goods and services but it does not apply to food (unprepared). Also I think there is some kind of dairy subsidy because our milk is less expensive than other states (usually around $1.99-$2.20/gallon). We have a state income tax but it is progressive. Everyone pays something but there is a big jump at the $107,651 mark. You go from $628 + 5.85% of income to $5,976 + 6.25% of income from $107,652-269,300. This also doesn't take into account that there are a few cities (NYC & Yonkers) that also have an income tax, and there is a commuter tax (outside of tolls) and of course local property taxes. It is not that we enjoy the taxes but if it comes to losing good teachers, special education support, important programs such as medicaid, disabled services, state university support etc. we pony it up.
All fine. The point is, it's what you want. We have very well funded schools in Teton Co. WY with no income tax. They get the $$ from prop taxes
That was actually a proposal of some classical liberal economists (Einaudi and Hayek), to let people deduce all savings and then apply a progressive tax on the residual income, thus effectively having a progressive consumption tax.
From the tone of your comment, I gather it would considered a crazy socialist idea in today's America. Just another example of the right moving the Overton window I guess
Are you familiar with the 'eye test' in basketball? In basketball we have so many advanced statistics to measure performance, offensive and defensive efficiency, etc., and they are very helpful, but the 'eye test' is simply watching a player for a game and seeing: are they any good, can they defend well, can they shoot well, how do they perform under pressure, etc. Advanced stats are awesome, but the eye test is still used today and for good reason. They put you face to face with the thing itself, as opposed to stats that interpret it.
That's the kinda approach I have with this. I don't doubt your stats or info, and I can't argue them, my field of expertise isn't economics and you are much better read and educated about that than I am, so I assume you are correct.
What I do want to bring up is an 'eye test' of sorts for this issue. While all the data points to the economy being good, my lived experience in it, and of those around me, doesn't point to that. I know it's anecdotal experience but I think it's worth mentioning since it doesn't reflect these statistics.
My lived experience, as well as those around me shows:
- Prices for everyday items required for living, such as dry food, dairy, meat, produce, etc., have all gone up substantially in the last couple years. Getting milk, eggs, bread, protein, and produce for the house went from $50 to $75 (of course that varies depending on how many in your household)
- Prices for vehicles have gone up in the past couple years, especially used cars.
- Prices for housing have gone up dramatically in the past few years.
- Wages have not gone up nearly enough to match increased prices.
- From February to April many people lost their jobs, and have been unable to find replacements other than part time gigs here and there, Ubereats, etc.
- The cost of medication has increased in the past 2 years, and more part time jobs means less health insurance and more out of pocket expenses for healthcare.
- There are so many overqualified people in the job market due to layoffs that getting new full-time jobs is very difficult. Not as difficult as peak Covid, but definitely more difficult than before.
- The overall price of houses may have dropped but with homes being worth almost 3x what they were 15-20 years ago, many people are priced out.
- With wages rising so little, and housing costs rising so drastically, as well as low availability to begin with, people with full time jobs are forced to live with roommates just to afford living in the city where their job is.
Again, I know this is all anecdotal experience and might not be replicated on a large scale, but it's the reality for many people, myself included.
For average people, data that points to the economy being better doesn't mean much when your wages have barely budged in 3 years but the bills and rent are all significantly higher, and you're spending 25% more on groceries and gas, used cars cost almost as much as new ones, etc.
But wages have been rising for people in the lower half of the income distribution.