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Bruce Raben's avatar

I am sure there is a term or phrase for perceiving or portraying reality contrary to the facts. And as you say leaders get blamed and praised for events while they are in the chair whether they had anything to do with events. So the proportion of attribution to Biden and his admin is for historians and economists to sort out but

But Damn!

The U.S. economy has outperformed the world and it probably wasn’t just random

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Varado en DC's avatar

The political theorist Antonio Gramsci said: "focus on a simple message and hammer at it incessantly, those who control the discourse will eventually inevitably control the power."

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Lynn's avatar

The U.S. economy has outperformed the world?

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Bruce Raben's avatar

Think so. What large economy has done better?

Not Europe. Not China. Who else ?

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Bruce Raben's avatar

I think this will be my last response to you. Do you have economics training? Your last question have nothing to do with the facts of inflation, growth, unemployment. The U.S. has outperformed

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mike harper's avatar

Which of these do you want to cut off?

Countries That Received the Most Foreign Aid From the U.S. in 2022:

Ukraine ($12.4B)

Israel ($3.3B)

Ethiopia ($2.2B)

Afghanistan ($1.39B)

Yemen ($1.38B)

Egypt ($1.37B)

Jordan ($1.19B)

Nigeria ($1.15B)

Pocket change in the Murikan budget. When you want to talk real money you have to talk in trillions.

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Tokyo Sex Whale's avatar

That ‘bankrolling’ is a tiny proportion of the US economy and federal budget. If it disappeared tomorrow, the economy would not look any different

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Rkumar's avatar

Noah, please consider writing a more detailed piece on risks of the high federal deficit.

I for one struggle to understand the problem with it. At end of day, if it’s not causing inflation, what is the risk with running high deficits? Im sure there is but would be helpful to have a framework to think about it.

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Noah Smith's avatar

I will, but in the meantime, check this out!

https://www.noahpinion.blog/p/no-one-knows-how-much-the-government

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DougAz's avatar

Another good one.

Physics biz dude me suggests

Solve for all doing similar borrowing, I think that constraint defines a bounded sustainable upper limit.

But, time is essentially unlimited....there may? Be a solution

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Lee's avatar

True and interesting that Japan is approximately factor of four times the US proportionally.

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Thomas L. Hutcheson's avatar

US defects in practice do not = Σ(expenditures with NPV>0). [They are greater than the sum of productive investments.] This means they shift resources from investment to consumption and that's bad for growth over time. Lower investment means lower income in the future. THAT (the lower income) is the sense that deficits place a burden on future generations.

And deficits raise the value of t he US dollar whihc is bad for a tradeable sector like manufacturing. [This is why we should use paid for subsidies to promote whatever "industrial policy" is promoting.]

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Curtis Cole's avatar

If all these numbers are good and yet people don’t feel the economy is good, perhaps it isn’t just bad marketing. Maybe the numbers are not measuring something - like fairness, equity, and the thousands of irritating things the current economy is built on like junk fees, endless logins, lack of human courtesy, etc. I think you call these intangibles or externalities or similar. I’m a physician not an economist but I was taught to treat the patient not the lab values. There is something very wrong with the economy now. Lots of people are miserable. Trump detects it and exploits it (and makes it worse). But democrats are not seeing it and look at false flags like these graphs to reassure themselves everything is ok. We can do better and we must do better. But we have to start looking in different places to figure out what is going wrong.

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Nancy's avatar

You are right. You are not an economist.

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Pedro Leon de la Barra's avatar

Who knows, maybe annoying logins are negatively correlated with economic productivity

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Buzen's avatar

Annoying logins, like secure email are problems that have current solutions (pass keys and digital signatures) but which companies don’t promote enough and consumers don’t adopt because they aren’t motivated enough to switch.

Regulations don’t help either, the HIPAA requires fax for secure medical communication when it is blatantly inferior and less secure than digitally encrypted and signed email.

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Jake's avatar
Oct 5Edited

My suspicion is that people don’t like the impact of inflation in concrete terms, not second order change rates. Groceries are still more expensive now than before the pandemic. They aren’t going to get meaningful cheaper. It doesn’t matter that they have stopped getting ever more expensive. It will take many more years, plus wage growth that outpaces price growth for things to get relatively cheaper (while at the same time nominal prices will be even higher). Even then nobody will get credit for it being more affordable - instead people will still be upset that nominal prices are higher (accumulated 2% a year or whatever)

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Thomas L. Hutcheson's avatar

I think economists are still in shock that after talking about inflation for ~ 100 years as the _rate of increase_ in prices, in 2021 the public decided that "inflation" meant the _level_ of prices. :)

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Nobodyknowsnothing's avatar

It is just sentiment that is all. Republicans dont like Biden so the economy sucks. If Trump was in power half the country would say the economy sucks with these same numbers. C'est la vie.

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NubbyShober's avatar

FOX News has been running nonstop the-Biden-economy-is-terrible stories since 2021. Which is exactly why Republicans believe the economy sucks. It has nothing to do with actual economic data, and everything to do with "alternative facts".

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Buzen's avatar

Average age of a Fox News viewer is 68, and I don’t want to speculate on their average IQ. I doubt it has much influence on economic sentiment.

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NubbyShober's avatar

FOX is shorthand for "FOX News, it's lesser imitators like OANN & Newsmax, RW Talk Radio, and RW broadcast networks like Sinclair." Much easier to just blurb "FOX", eh?

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Thomas L. Hutcheson's avatar

Of course the climate doomsters don't help!

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Lee's avatar

Excellent points!

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Kathleen Weber's avatar

FYI, David Brooks mentioned Noah in a column on industrial policy.

https://www.nytimes.com/2024/10/03/opinion/industry-policy-manufacturing.html

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Miles's avatar

The housing price thing reminded me: any thoughts and the "affordability crisis" framing that Anne Lowrey has presented (on The Ezra Klein podcast and in the NYT)?

Something along the lines of, yes this data is good, but achieving a middle class lifestyle still seems out of reach for many people because of big costs like housing and childcare, so this is why people are not feeling the positive economy.

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Buzen's avatar

Both are high due to regulations: housing due to zoning restrictions, environmental rules and childcare due to certification and child to carer ratios.

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User's avatar
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Oct 5
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Miles's avatar

Honestly, I'm not sure how much I care about the value of my home going up while I have no plans to move. I don't even really know how the value has changed in the past 12-24 months.

But younger people trying to buy homes are very aware of what's going on in the housing market. So I think it might be an issue where the salience is stronger with the people having the negative experience.

Meanwhile I am doing great personally but reaching the point where college bills are about to start, and those are terrifying. But not to people in other phases of life, perhaps.

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George Carty's avatar

On gasoline prices, how great a risk is there that Netanyahu will do something (like attack Iran's oil infrastructure) to engineer a spike in prices to help his ally Trump back into the White House?

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Noah Smith's avatar

That's something I hadn't thought of...

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Lee's avatar

Noah thank you. I subscribe and enjoy your writing. Iran is exporting approximately 1 MBD. Both the Saudis and the UAE and the Americans have that much spare capacity. That being said, I suspect there would be a war premium tacked onto the world oil price, but it shouldn’t be substantial. It would not surprise me to see Israel Take out some or all of Kharg Island. IMO

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Noah Smith's avatar

Yeah I don't think it would be 1973 or anything. Maybe a little bump in prices though.

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BARRY GANDER's avatar

Iran supplies 2-3% of the oil supply; the US could just increase its production marginally and take care of anything Netanyahu could do.

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Kenny Easwaran's avatar

Do you think that US producers are holding back right now so that they have a possibility of increasing marginally in the future to make up for a loss of foreign production? My assumption would be that they are likely operating near capacity for current prices, and won’t be able to profitably increase production much unless there is a sustained rise in prices.

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BARRY GANDER's avatar

There is merit in what you say. I should have expanded my observation to include their colleagues the Saudis, who could easily increase production to make up for any slack from Iran. But I would also expect that an opportunity to blame Iran will be used to jack up prices...the essential point though is that the actual supply will be fine.

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Marjolin's avatar

To me, it is obvious that the US and Israel should have obliterated Iran's military capabilities a long time ago. We are in this situation precisely for not having done so. Appeasement never works.

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George Carty's avatar

There's also the question of whether or not (in the aftermath of an oil price spike) US voters would believe that a second Trump administration would be able to bring the price back down again.

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Buzen's avatar

Apparently Biden convinced the ILWU to postpone their strike till after the election, he has less leverage with Netanyahu.

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Buzen's avatar

The leverage on the union is the Taft-Hartley act.

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Marjolin's avatar

This assumes that it is not in Israel's national security interests to strike Iran.

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George Carty's avatar

My point is that an attack on oil infrastructure could have an effect on US electoral politics that an attack on (say) Iranian military targets wouldn't have.

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Marjolin's avatar

Israel is going to strike where it thinks it will be most effective in enhancing its security, despite it diminishing the Democrats chances of winning the election. Quite the opposite, if Israel acted against its interests because of American politics, that would be political interference.

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George Carty's avatar

And perhaps Israel thinks that putting Trump back in the White House will enhance its security.

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Marjolin's avatar

That is possible. Biden should have allowed Israel to finish the war a lot sooner rather than continuously putting roadblocks in its way. The war would have likely been long over by now. You reap what you sow.

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George Carty's avatar

Which "roadblocks" exactly do you think Biden has been putting in Israel's way?

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Marjolin's avatar

That is theoretically possible. But Israel has lots of other reasons to strike Iran. Contrary to the American media's insinuatiions, the Israeli public understands this.

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Marc Robbins's avatar

And yet if Harris said all this in a speech (even if the second half said what she wants to do to keep the good economy going), it would be seen by the media as a colossal blunder. I'm starting to think this is a worse blunder by the media than "but her emails!"

I'm trying to imagine how future historians would try to explain to their students why the US elected Donald Trump because something convinced too many voters that the economy was terrible.

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Thomas L. Hutcheson's avatar

Economists did not help by failing to give credit for necessary inflation and blame for any unnecessary inflation to the Fed. I think we give in too easily (and sometimes even amplify) to the notion that Administrations have any effect on things like employment and inflation.

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Michael's avatar

I was getting angry about the lack of attention to deficits, but then you went there.

A well-supported and objective analysis. Thank you.

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Mark Stevenson's avatar

We should definitely pause the appreciate the remarkable US economy. But we should also pause to reflect that the economic policy of most other countries is failing their citizens.

When I last looked at it if everyone in the world had the GDP (PPP) per capita of the US *I think* we'd have a global GDP about 3.5x what it currently is. Given that many countries would benefit from an economic policy (at least in principles - prioritise GDP growth, productivity growth - if not in exact specifics) that was "copy the US", why, oh why, do most countries (and I'm looking at you, UK and EU especially) have such bad economic policy?

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Robert Merkel's avatar

I’d be more impressed with the idea of just “copying the US” if somebody could explain just how US productivity growth has been so much higher than the rest of the developed world.

I think I saw an analysis that suggests that a) it’s not AI, and b) most of the difference is in the service sector. Why is it that US accountants etc have made more productivity strides than not only Europe, but Soith Korea, Canada, Australia etc?

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Lee's avatar

I think a big part of our success in the US is the cost of energy. Natural gas and oil which are the backbone of an industrial policy anywhere not to mention the feedstock of most things, the price of natural gas in the United States is about 1/4 to even 1/8 of what it is everywhere else in the world. (Not sure about cost within Russia.). it is certainly exceptionally higher in the EU and China.

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Robert Merkel's avatar

Like I said, I’ve seen (I think in either an Economist or FT article) that a lot of the productivity surge in recent years has come from services. Energy costs are largely irrelevant to these, and yet it appears US service workers have improved their productivity more over the last few years than in other developed countries.

So I’m not buying the “cheap natural gas” story either.

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Buzen's avatar

Drill baby, drill! And frack!

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George Carty's avatar

How much is US economic superiority driven by factors that inherently cannot be replicated by other countries, such as better natural resource endowments (eg oil and gas from fracking) or incumbency in an inherently winner-take-all industry like Big Tech?

https://xcancel.com/CraigWilly06/status/1621493546892107776

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Buzen's avatar

Overbearing regulations that the EU places on tech, energy and other businesses does not help. The EU just banned removable plastic bottle caps to prevent beach litter.

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George Carty's avatar

I've noticed that connected bottle caps have become the norm here in the UK as well, in spite of Brexit.

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earl king's avatar

For the young and those at or near retirement things are not so great. Your car insurance has gone way up. Repairs and parts and labor are also way up for both homes and auto. The rate of inflations has come down but not prices.

Sure my house has gone up in value. I put money into it but will get it back and then some. That said if I Sell now all the money I made will not get saved or invested. It will go to moving to a new home somewhere. My new home will be smaller if I want to live in a desirable place. If my new home needs a new kitchen or bathrooms that will cost far more as a percentage of my retirement income.

People are grumpy about costs. All people talk about. Probably even your well off friends mention prices. I wasn’t able to go thru Fridays jobs numbers but I know several out of work people in NYC. Nobody is even interviewing. They’re all on hold. As for jobs, the avg number for all government jobs has been 45,000 a month for this year. Down in Sept. Manufacturing went negative. Government has been the driver and that has been bad and is always bad.

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Kathleen Weber's avatar

Just one point of disagreement, Noah. Fox News doesn't HAVE to report good news about the US economy in October when a Democrat is in the White House. I'm astounded they did it.

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Nobodyknowsnothing's avatar

hy is the day of reckoning approaching? There is no evidence of that at all, we will continue to party like it's 1999 with deficits till the eye can see. After all Japan's debt to GDP is even higher than the USA and they have hung around without the apocalypse hitting them. US will keep "motoring on" until further notice. The developed countries with the highest debt and deficits have some of the lowest bond yields.

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Bill Flarsheim's avatar

Of course in 1999, before the Bush 2 tax cuts and wars, the US had a budget surplus.

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Buzen's avatar

Japan has not been doing too well economically lately.

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AP's avatar

Please address this on the grocery foods - the headline says food prices are expected to fall, but the article says, "In 2024, prices for all food are predicted to increase 2.2%, with food-at-home prices projected to go up just 1%."

This looks to me like a deceptive headline - food price inflation is expected to decrease, but there's nothing in that article that talked about food prices actually experiencing deflation of any sort.

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Buzen's avatar

That appears to be the fault of the headline writer. Grocery prices are expected to be lower relative to other prices, not to current prices. I don’t think Supermarket News is a mainstream news source.

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AP's avatar

Yes, but this issue s immensely important to people who live paycheck to paycheck, and Noah is promoting the idea that it's predicted to get better. "You're only going to have to cut back just a little more instead of just 'more'." will ring hollow and tone deaf to millions.

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Mikhail Amien Johaadien's avatar

You say we're not in the roaring 20's yet - but what more do we need? Also re productivity growth, are you accounting for the positive revisions we should see later this month?

I think we're at least as good at the productivity growth we saw in the 90's miracle!

Also compare this to the post-08 recovery - fiscal was clearly too small post 08, and cost us almost a decade of low growth.

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Buzen's avatar

It would be nice to have more building productivity and more and cheaper houses.

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Vasav Swaminathan's avatar

Our economy is great, but even more our country is far more resilient than we think. It so far has survived this century - a major domestic attack on our largest city, two unpopular wars that didn't end with ticker tape victory parades, a major hurricane which knocked out a major city, the worst financial crisis of a generation, a global pandemic, and then an attempted violent coup. A lot of these are self inflicted, sure - but we have survived. And there is honor and joy in doing that, and resilience as well.

Vibes can be off because of the our society has seen major changes wrought - but, well, let's move forward and recognize that despite the culture wars, we got through these things together and we're on the other side of them together. That's how we make the '20s roar

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Dan Glick's avatar

Any data on how this compares to the late 90s? For my generation (I'm in my early 40s), late 90s is the prototypical hot labor market.

Anecdotally, I know a fair number of friends in the general labor pool (i.e. the broad swathe of white-collar work that requires some experience, but is not deeply specialized) who have struggled a lot with finding positions

Ratio of unemployed to job openings is still below 1, which is better than anytime between 2000 and 2018 [1], but I can't find data before 2000.

[1] https://fred.stlouisfed.org/graph/?g=p9aA

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