48 min

Hexapodia L: Why Is Such a Good Economy Seen as Bad‪?‬ "Hexapodia" Is the Key Insight: by Noah Smith & Brad DeLong

    • Business

Key Insights:
* Brad has a new microphone!
* Noah has jet lag: he is just back from Japan.
* Brad has jet lag: he is just back from Australia.
* Perhaps inflation’s ebbing has not yet made its way into the minds of people when they answer pollsters.
* We reject the hypothesis that it is because of lagging real incomes.
* More difficult mortgage borrowing and positive interest payments on car loans are a thing, but really unlikely to be a big thing.
* It seems likely that 2024 will be, if not “morning in America” from a consumer confidence in America, a crepuscular pre-dawn lightening in America.
* Noah's theory springing out of Rick Perlstein's take on the 1970s—that we are replaying it:
* Even in the 1970s, it was not inflation but “social upheaval”
* Half “Blacks and women are forgetting their place”
* Half “things are very insecure and unsafe”.
* The 1970s saw right-wing revolts
* The 1970s saw left-wing disillusionment
* And then along came inflation!
* Is this cycle repeating itself?
* Our guess is that “vibecession” has peaked—but we worry that Kyla Scanlon may be right in thinking it has deeper roots. This is a much more unequal society for white guys than we had in the 1970s.
* Brad DeLong trusts center-left economists, and they say: (4), (5), (6), and (7).
* Noah Smith summarizes: Normie Libs keep winning…
* Noah Smith summarizes: Normie Libs keep winning because they mark their beliefs to market and trust empirical data…
* Hexapodia!
References:
* Barry Eichengreen: The US Economy Is Up, so Why Is Biden Down? https://www.project-syndicate.org/commentary/biden-popularity-lagging-strong-us-economy-by-barry-eichengreen-2023-08>: ‘The outcome of the US presidential election next year, like most before it, will almost certainly turn on domestic economic conditions, or, more precisely, on perceptions of economic conditions. And recent polling suggests that the disconnect between perception and reality may be President Joe Biden’s biggest problem…. Now that personal consumption expenditure inflation is back at roughly 3%, down by nearly two-thirds from its peak, will Biden get more credit for his economic achievements? The answer will turn, first, on whether there is widespread public recognition that inflation has receded. Any such realization will not be immediate…. This slowness of beliefs to adapt to actual economic conditions is likely to be even more pronounced in an era of fake news…
* Darren Grant: When it comes to the economy, everything’s great and no one’s happy https://www.vox.com/money/2023/8/10/23824742/real-wages-economy-inflation-no-money>: ‘Why a supposedly good economy is making so many people miserable…. Pollsters regularly ask Americans how they think the economy is doing, and whether it is getting better or worse. Both measures have drifted downward since late 2020 and cratered this past year. Everything’s amazing, almost—and nobody’s happy. This is new. Public opinion had historically followed the business cycle, declining in recessions and improving in expansions like the one we’re experiencing now. For observers of the economy, this divergence was akin to being lost in the woods. They trotted out all sorts of explanations for our unexpected pessimism…. What’s going on isn’t vibes…. People’s pay hasn’t been keeping pace with inflation…
* Mike Konczal: ‘It’s tough to judge noise https://twitter.com/mtkonczal/status/1689625642046771200> from signal in monthly analysis…. A way to get around monthly myopia: look at longer periods and past used cars and shelter prices. How does 3/6-month ‘supercore’ measure look? That’s what the Fed is doing, and it looks fantastic. We’ve seen dips since 2021, but not like this. 3-month lower than prepandemic!…
* Paul Krugman: ‘Lots of number-crunching out there https://twitter.com/paulkrugman/status/1689638373403803648>, but this was another very good inflation report. The debate o

Key Insights:
* Brad has a new microphone!
* Noah has jet lag: he is just back from Japan.
* Brad has jet lag: he is just back from Australia.
* Perhaps inflation’s ebbing has not yet made its way into the minds of people when they answer pollsters.
* We reject the hypothesis that it is because of lagging real incomes.
* More difficult mortgage borrowing and positive interest payments on car loans are a thing, but really unlikely to be a big thing.
* It seems likely that 2024 will be, if not “morning in America” from a consumer confidence in America, a crepuscular pre-dawn lightening in America.
* Noah's theory springing out of Rick Perlstein's take on the 1970s—that we are replaying it:
* Even in the 1970s, it was not inflation but “social upheaval”
* Half “Blacks and women are forgetting their place”
* Half “things are very insecure and unsafe”.
* The 1970s saw right-wing revolts
* The 1970s saw left-wing disillusionment
* And then along came inflation!
* Is this cycle repeating itself?
* Our guess is that “vibecession” has peaked—but we worry that Kyla Scanlon may be right in thinking it has deeper roots. This is a much more unequal society for white guys than we had in the 1970s.
* Brad DeLong trusts center-left economists, and they say: (4), (5), (6), and (7).
* Noah Smith summarizes: Normie Libs keep winning…
* Noah Smith summarizes: Normie Libs keep winning because they mark their beliefs to market and trust empirical data…
* Hexapodia!
References:
* Barry Eichengreen: The US Economy Is Up, so Why Is Biden Down? https://www.project-syndicate.org/commentary/biden-popularity-lagging-strong-us-economy-by-barry-eichengreen-2023-08>: ‘The outcome of the US presidential election next year, like most before it, will almost certainly turn on domestic economic conditions, or, more precisely, on perceptions of economic conditions. And recent polling suggests that the disconnect between perception and reality may be President Joe Biden’s biggest problem…. Now that personal consumption expenditure inflation is back at roughly 3%, down by nearly two-thirds from its peak, will Biden get more credit for his economic achievements? The answer will turn, first, on whether there is widespread public recognition that inflation has receded. Any such realization will not be immediate…. This slowness of beliefs to adapt to actual economic conditions is likely to be even more pronounced in an era of fake news…
* Darren Grant: When it comes to the economy, everything’s great and no one’s happy https://www.vox.com/money/2023/8/10/23824742/real-wages-economy-inflation-no-money>: ‘Why a supposedly good economy is making so many people miserable…. Pollsters regularly ask Americans how they think the economy is doing, and whether it is getting better or worse. Both measures have drifted downward since late 2020 and cratered this past year. Everything’s amazing, almost—and nobody’s happy. This is new. Public opinion had historically followed the business cycle, declining in recessions and improving in expansions like the one we’re experiencing now. For observers of the economy, this divergence was akin to being lost in the woods. They trotted out all sorts of explanations for our unexpected pessimism…. What’s going on isn’t vibes…. People’s pay hasn’t been keeping pace with inflation…
* Mike Konczal: ‘It’s tough to judge noise https://twitter.com/mtkonczal/status/1689625642046771200> from signal in monthly analysis…. A way to get around monthly myopia: look at longer periods and past used cars and shelter prices. How does 3/6-month ‘supercore’ measure look? That’s what the Fed is doing, and it looks fantastic. We’ve seen dips since 2021, but not like this. 3-month lower than prepandemic!…
* Paul Krugman: ‘Lots of number-crunching out there https://twitter.com/paulkrugman/status/1689638373403803648>, but this was another very good inflation report. The debate o

48 min

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