Dean Baker Editorializing on the Economy
Back to my points (AB), we have survived a pandemic, provided for the welfare of the citizenry, and the nation is on its way to better times. The only sticking point being the 2017 tax cut which is leaving the nation with another reoccurring deficit.
How quick the influential 1-percenters were to move away from Biden as this was on his list of things to fix. Will a President Kamala make it a priority too?
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Back in the 1990s, when Republicans and even many Democrats were looking to cut and/or privatize Social Security. The standard wisdom being to be taken seriously, you acknowledge Social Security was facing a crisis. Even many progressives who supported the program repeated that line.
Social Security, of course, was not in a crisis, and it was important to say that to beat back the privatizers. We are seeing much the same story today, as when The Washington Post lectured us in a recent editorial headlined “Telling Americans the Economy Is Good Won’t Work.”
Well, the economy is good, and we should not be shy about saying that. To be clear, we still have tens of millions of people who are struggling to make ends meet and who sometimes can’t. This, however, is a structural issue that will take time to overcome and is a near-impossible task with a divided Congress.
Like many progressive economists, I view the unemployment rate as the single most important measure of the health of the economy. By this measure, the economy is doing great. We have seen 28 consecutive months of below 4 percent unemployment, beating the streak in the late 1960s boom. This is extraordinary — and something almost no one would have considered possible when Joe Biden took office.
Unemployment is a big deal. Not least. because in an economy where most people depend on their wages for the bulk of their income, those who don’t have a job are screwed. But the benefits of low unemployment go well beyond simply putting more people on a payroll.
In a tight labor market, workers have more bargaining power, especially those at the bottom end of the wage distribution. We have seen that during this recovery. The real wage (inflation-adjusted) for workers in the bottom decile of the wage distribution rose by 12.1 percent from 2019 to 2023—and this was following decades of stagnation.
Low unemployment allows workers from groups that face discrimination in the labor market to get opportunities they otherwise never would have had. In this recovery, we have seen the lowest unemployment rates ever for Black Americans and Hispanic Americans. The wage gap between Black and white workers has also fallen to a record low.
A strong labor market also means that people can escape bad jobs. In late 2021, tens of millions of workers left their jobs for better ones, and by 2022, workers reported the highest rate of job satisfaction ever.
This good news has barely been a blip in the media’s reporting on the economy. Instead, there have been endless stories about people being hit hard by inflation. It is often highlighting situations where the size of the hit is implausibly large. The reporting rarely points out that much of the inflation was a result of the pandemic and that nearly every other wealthy country took a comparable hit. This is like reporting on a housing shortage in the aftermath of a hurricane and not mentioning what destroyed the housing stock.
Now that inflation has fallen back to its pre-pandemic pace by some measures, much of the media has chosen to highlight the absurd expectation that prices will go back down. Prices will not fall back to where they were four years ago, because nominal wages have risen by 22 percent. Anyone expecting prices to fall following the high inflation of the 1970s would have been rightly treated as a kook, not featured prominently in news stories on the state of the economy.
We also keep hearing about invented crises. CNN decided to spotlight the retirement crisis at a time when most near-retirees have never been better prepared for retirement. And there is the perceived tragedy of young people never being able to own a home, even though their ownership rates are above pre-pandemic levels. And The New York Times just told us that recent college grads can’t find jobs, when their unemployment rate has returned to pre-pandemic levels.
We rarely hear about the 14 million homeowners who refinanced their mortgages between 2020 and 2022, most of whom are now saving thousands of dollars in annual interest.
One final point: No one is telling people that they are wrong about their own financial situation. People have negative views on the economy in general, but surveys find that people say they are doing pretty well themselves. Their negative views of the economy stem from the fact that they believe others are doing poorly. When we tell these people that the economy is good, we are just telling them that everyone else is doing as well as they are.
In short, we should stick with the data, not the pundits. Given the political and practical constraints that President Biden has faced, the economy is good—even excellent. We should be repeating that over and over again.
Do People Think the Economy Is Bad Because the Media Failed, or Because the Economy Is Actually Bad? The Nation
Actually, repeating over and over again might be a bad idea, depending on what you are attempting to accomplish by doing so. My opinion only, but the feelings about the economy are neither so positive nor negative that I expect any significant impact on the economy from these perceptions. It won’t really matter much if people feel better today or it takes another half-year….it might never matter to be honest. I think I’ve said it before, but food prices seem to influence perceptions for longer than most other purchases. Nothing ever can stay the same, but another year of stable food pricing will cheer people up more than telling them over and over to cheer up. People aren’t so bummed that it’s hurting business, so just give it time.
Food prices and supply chain are not Biden’s fault. That is big business manipulation.
Screw your opinion . . .
That red headed step-child called inflation has many suspected fathers.
No it does not. This is entirely related to supply chain manipulation and size changes. We experienced similar in 2008.
Bill, what’s gotten into you? Who is talking about Biden? Not me. Who is talking about the causes of food price increases? Not me. In the past few weeks I’ve seen a commenter attribute to me, with quotation marks, things that were not even reasonable paraphrasing of my actual comments and now you invent non-existent elements of this comment so you can comment on it. If you wish to say ‘Biden was not to blame for higher food prices’ fine, but you can do so without dragging me into it.
Eric
I asked you to explain why you thought I had misquoted you. You did not bother. Now you are lying about me.
which is too bad, because I mostly agreed with your comment today…except that you miss the point that with Trump telling everyone we are having the worst economy in history due to crooked Joe…we need to try to point out that is not true.
And Baker….whom I admire…needs to take more seriously the fact that some people are not doing well at all.
Please….if you think I misquoted you, put some time into explaining why you feel that way. Let me suggest, as I will if you actually do try to explain, that using “quotation marks” around a paraphrase is not a crime. most literate people can tell in context…that is with the comment being paraphrased right in front of them…whether the paraphrase is at least honest, if perhaps not accurate.
Please stop lying about me. In this space no one can telll who said what. Being on the side of the Great Person who also accuses me of lying when I try to paraphrase to illustrate the meaning of what he said, does you no honor.
Eric
Stop playing the poor misquoted victim.
“another year of stable food pricing will cheer people up more than telling them over and over to cheer up. “
but in six months or a year the election will be over. and telling people now over and over that crooked Biden is the cause of the inflation that is hurting them might cause them to vote for Trump. And that will not cheer them up after they realize what they have done.
i am not as blunt as Bill, but I find your opinion shows you don’t have much of a grasp of what is going on, or even what is being talked about. or even what you are talking about.
On the contrary, repeating over and over again has been demonstrated to be very effective. Authoritarian propogandists have long known this, but liberals feel embarrassed by using the concept.
Shapiro
that is true too. but i think liberals…who tend to be better educated, if not necessarily “smarter” get annoyed with hearing “over and over (and over)” while less educated people just think that anything they hear over and over must be “the truth.” unless they have been told over and over that the other guy is lying.
We may be heading toward a country where most people rent all their lives. Or we may be heading for a country where extended multi-generational family homes are the norm again.
Both multi-generational dwelling and renting forever are perfectly valid solutions. They are not compatible with the “American dream” of owning your own home, but they are perfectly acceptable solutions in other parts of the world.
Dean Baker had something to say about this as well.
Arne
best part was his correction to 2020 data. Baker is pretty solid, but no one seems to listen to him either.
Jane E
maybe. but there are problems with renting (corporate landlords) and extended families may no longer really exist in America.
nice thing about owning is that it eliminates the natural conflict between renter and landlord. government built small houses might help young people, old people, homeless people: owning incentives taking good care of property. very low down payment directly to government and no-foreclosure contract would work better than you might think.