156 Comments

Yeah, you're probably right dude. But it takes a decade to realize the last one was good. Taibbi and Kern were punching against this narrative this week, but it will likely work out like this.

My students now have prospects that were hardly a dream ten years ago, and this is in a D2 school. They're getting snapped up like candy by corps who want to "train to standard", which means they're going to be killers in the market five years from now once they have their legs beneath them. As someone like you who had to knife it out in the early 2000s (pre-crash), I'd trade a whole bucket of my education for their opportunity now.

If you want to be in the office and make connections now, the world is yours for the taking in the USA. If you wanna gripe on TicToc or X about affordable housing and flexible work schedules, then you're entering a seller's market.

The next gen is getting it. America is going to be incredibly strong.

This coming from an unapologetic, apathetic Xer who thinks generation theory is complete BS baked up by some posers who didn't do the math (or the reading) and just needed to rimshot tenure.

Regarless, I'm optimistic. Keep up the good work bud.

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Nov 19, 2023·edited Nov 19, 2023

I am a millennial and I resent how easy current college students have it getting their feet in the proverbial doors.

Not to mention all the whining you hear on social media about capitalism and how bad things are (though that is probably a different population than those seeking work.)

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As a venezuelan when I hear them claim that Maduro is a "state capitalist" I just shake my head and walk away...

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Try graduating the May after 9/11 when people a few years older were getting showered with offers in the late 1990s.

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I would rather not. Great Recession was not fun. I don’t want a repeat.

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Nov 18, 2023Liked by Noah Smith

Labor shortages and high wages drive productivity growth. It’s actually in businesses long term interests not to have labor that’s too cheap.

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This is a secret reason for minimum wage laws - by eliminating unproductive jobs they may force productivity growth and compete with other countries better. (But they also might not.)

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By 1984 we were producing more cars than we produced before the recession but we were employing fewer workers to do it…if you read the articles from 1984 the auto executives said it was cheaper to pay overtime because each new worker required benefits.

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Southern Confederates hate this one weird trick! /s

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There is of course Ukraine Gaza rampant antisemitism and Trump Iran. And China is being nice because their economy is messed up. They are not nice

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These drive imports if capital investment is expensive and risky

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Nov 18, 2023·edited Nov 18, 2023

Another promising development is the increasing positivity around nuclear power worldwide.

Construction numbers are approaching economics of scale levels for some reactor types, leaving nuclear's first of a kind trap experienced by Europe and the US in the 2010s.

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Grid infrastructure would make even fusion electricity relatively expensive. We get nuclear all wrong here—nuclear should be to move water or desalinization and it should then be for peak electricity. Using nuclear for base load electricity is the wrong business model.

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Excuse me? Base load is exactly what nuclear power is excelling in.

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Nope, if it was excelling we would be about to complete more nuclear power plants because Bush and Obama passed very pro-nuclear policies. So the current business model is very obviously the WRONG business model because even federal largesse couldn’t make the business model work!!

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Nuclear power has high CAPEX cost and low marginal electricity cost. Lifetime of plant components is also reduced by changin plant power.

So all points to NPPs being most suited for operations where they run on constant power all the time.

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Correct, just not to supply base load electricity.

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I'd love to get your take on this NYT article. It attempts to explain why Trump has better economic marks than Biden.

https://www.nytimes.com/2023/11/16/opinion/why-voters-arent-buying-bidens-boasts-about-bidenomics.html

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Just ask anyone trying to buy a house at these prices using a 7 or 8 pct mortgage….maybe after a trip to the grocery store.

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Take a look at the chart of inflation vs wages by presidential term

It’s not the headline, it’s the content

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The economy is a lagging indicator of economic policies…the current economy is the result of Trump economic policies. The economy in 2024/25 will reflect Biden’s economic policies. Honestly if Trump beats Biden I will probably never work to unseat a sitting president because what if Kerry had beat Bush and then got saddled with that awful economy?? Obama probably never becomes president.

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Obviously past fiscal deficit spending and current fiscal spending didn’t contribute to inflation. Aggregate demand doesn’t matter for prices obviously, and the rate increases didn’t remove demand from the market, because obviously prices aren’t dictated by supply and demand. This was a joke article. Hope your future ones are better, or you’ll lose a subscriber.

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Removed (Banned)Nov 19, 2023
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They are not particularly or historically high; some media said they were but they just can't read.

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

https://x.com/claudia_sahm/status/1725525221271032250

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Can you state what your point is then? I would have thought that a chart showing that debt to income levels are low is relevant to a claim that debt is high.

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I’m trying to figure out if this is a real comment. “Obviously prices aren’t dictated by supply and demand”? I can imagine someone saying that supply and demand aren’t the whole story on prices, but I would have thought they would say what else they thought was relevant.

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Yeah he seems to be drinking the Kool Aid. Also, although progress on alternative energy would be great, there are definitely strong headwinds.

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1. More immigration

2. Make permits easier

3. More YIMBY

Do these and we really have a roaring 20s.

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MRNA vaccines are great and all but when do we get the parties and legal cocaine/laudinum they had (or better designer drugs)?

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Who needs drugs when you have video games?

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Try playing videogames on drugs!!!

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Seems like the govt is paying a lot for its debt now. (Over $600 billion a year) And increasing investment in military stuff will increase it further, rather than paying it down. Is this going to drag on the economy or cause other problems?

https://www.washingtonpost.com/business/2023/10/20/interest-debt-payment-treasury/

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The government is finding it hard to find buyers for all the new dept, regardless of the stress of paying the interest in existing dept. At the same time consumer credit card dept is ballooning even as CC interest rates increase. These are not signs of a good government approaches to the economy, or a roaring economy.

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"Using vaccines to treat cancer will reduce disease burden"

Keeping more people alive longer will not reduce overall health care burden. It will just shift to some other problem. We humans all die, but we fight it like hell.

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If you extend healthy life without extending the length of time people spend in the process of dying, then you reduce the fraction of people that are dependent on health care rather than contributing to it. That decreases burden.

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Big if

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Definitely. I’m just explaining the claim that was being made.

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Noah, I agree that this that the economy is not on a government spending fueled sugar high, but what are you smoking?

Be sure someone is holding the string that keeps you attached to Mother Earth.

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Um, remember what happed after the roaring twenties?

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I don’t understand the reasoning behind “The percentage of Americans age 18-64 receiving Social Security Disability payments was only 3.9% in 2022, compared to 4.8% in 2013. Vaccination reduces the severity of Covid, which likely prevents long-term disability due to lung scarring.”

Because COVID did not exist in 2013, the population had 100% protection against COVID, far more than any vaccine or vaccination program could provide. Unless the existence of COVID by itself was somehow crowding out other sources of disability while, thanks to vaccination, causing less disability than those other causes, this doesn’t add up.

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I think those are two different points. He's saying the disability rate is lower even with covid, probably because of a healthier economy rather than a healthier population.

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Exactly, in 2006 when the same economists now saying how terrible the economy is were saying the 2006 economy was very strong prime age employment AND labor force participation weren’t back to the 2000 high. Keep in mind boomers started turning 65 in 2011 and so it should have been obvious to everyone that headline economic numbers were misleading and the economy wasn’t strong. One big reason for headline inflation prints seemingly being positive was that Katrina made it appear energy prices were finally declining when in reality they were recovering from a supply shock but energy was still more expensive than prior to Katrina.

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I just want to say that Tokyo Sex Whale, Mediocre White Man and Pangolin Chow Mein are all great three-random-word names for my jam band's first album. :)

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Good analysis. I would add one more important factor in the analysis of why we are in the current goldilocks situation....The Covid-19 pandemic. Of course, much like a major war, the pandemic was a tragedy. However, much like a major war, the pandemic accelerated technology (especially around automation/virtualization) which would have taken years (decades) to happen "naturally." The current jump in productivity can be directly traced to the rapid absorption of these technologies in the economy.

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The first step is companies realized they could survive with their people doing a lot less productive work because these people were just having meetings with each other rather than creating product.

The second step will be less people.

The third step will be offshoring remote work to cheaper, harder-working locales.

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Yes...though I think most of this has already happened. Of course, this causes a shift in work flows, and new jobs categories are generated.

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Noah

Are you considering the Billions that government spent during the pandemic. And how in Canada,

The slight intrest rate hikes had people panicking,

Because the average Household is up to its eyeballs in Mortgage Debt because they thought the housing market was never ending? They had to get in? Car loans for two cars because both had to have personal transportation.? Credit Cards maxed to the limit, at what 28%

Right, my first house in 1985 had a Mortgage at 12% my GMC 1500 had a loan at 14%

Well what do you think would happen if interest rates went to 8%"never mind 12%?

People are already returning loaned vehicles because they cant keep up payments.People are turning to trustees to consolidate debts,

Food Prices soaring in the post two years.

Couple that with the commercial vacancy rates because of The Pandemic. Commercial Real Estate Companies are suffering.

I think you, we, should be careful , as someone who has a house paid, no credit card debt, and money in the bank, my recommendation to you at this point in time, is to act and think, like your walking on eggshells. Why do I say that, you ask? its the intangibles, they are always the things or events that can put a wrench into the best laid plans

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Just Great Noah

The Roaring Twenties

Young Man what followed the Roaring Twenties?

Thanks a lot!

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Exactly. He doesn't have practical work experience so he is only a paper economist you know the kind that gets economic policies wrong.

Noah Smith:

Two statements from your post:

“Productivity had soared during the pandemic“

“Labor productivity — just real GDP per hour worked — was in the dumps in 2021 and 2022.”

Do you think through and proof read your write-ups because it sure looks like you don’t. Don’t delete this comment please answer it.

Also, do you remember what the “roaring 20s ended with” ; a little known event which went by the name of the ‘Great Depression’. GD wasn’t a black swan event it was the result of the largesse of the 20’s kept going by easy credit. High rates alone don’t mean tight credit if the lending standards are falling to accommodate credit re-cycling. US household debt particularly credit card debt is the highest it has ever been. Think like an economist for a change.

Noah, heard someone named Fact Check totally ripped you apart on Twitter?

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> GD wasn’t a black swan event it was the result of the largesse of the 20’s kept going by easy credit.

It was mostly because we were really bad at monetary policy. Wasn't a necessary consequence of anything.

> US household debt particularly credit card debt is the highest it has ever been.

So is the US population size, and net worth, and income. Household debt is completely normal relative to all of those.

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Trends are fine (better than 2019) and debt for the median household is also good.

https://x.com/claudia_sahm/status/1726238568140673273

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> Who cares about 2019? What relevance does that have?

It's a year in the recent past that had a good economy. What else do you set trends from?

> Greg McBride, chief financial analyst at Bankrate

That's just some guy who runs a website with a bunch of calculators on it. (And also publishes that badly done survey where a bunch of people earning over $100k claim they "live paycheck to paycheck".)

We don't need him, we have the Survey of Consumer Finances.

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Look at the data in his chart. It soared in 2020, fell off in 21-22 and is back up in 23

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You might want to look at the chart again Andy, this time with a ruler underneath the x-axis to be able to infer the months. The shaded area represents a recession and it occurred before Covid lockdowns. The spike is at the start or right before covid not “during” covid. Also productivity and productive efficiency are related but different concepts. The very fact that there was a recession then means aggregate production per unit time had gone down. When there are layoffs that is when existing workforce works harder & puts in longer shifts not just to make up for the resources laid off but also to give management a better picture of ones productivity to be able to avoid being laid off.

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Your two possible explanations for why inflation is falling imply that inflation was caused solely by supply side shocks. While that certainly contributed, we can't ignore the huge amount of money poured into the economy. I believe that despite increased inflation, people are still sitting on hoards of cash which is why we're not seeing more economic distress in the form of a recession.

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