President Biden criticized news coverage of the U.S. economy as he faces growing backlash from voters over his handling of inflation. In brief remarks Saturday before boarding the presidential heli…
Pandemic-disrupted supply chains are pretty much righted. Inflation is already back near normal levels. Labor shortages have eased. The Federal Reserve is poised to cut interest rates next year.
We’ll still get a thousand stories about a looming recession.
Inflation is back near normal, but prices are not, and wages have not shifted to match those prices (partially due to the government fighting “wage inflation”). People are still worse off than they used to be. I don’t think this is Biden’s fault, but here we are anyway.
Biden has called this out. A lot of companies are still raising prices or aren’t letting prices fall. They’re still saying “oh, this is inflation causing this” while their costs fall and their profits rise.
Biden can’t stop them singlehandedly. (He’s a President, not a Supreme Dictator.) But he can call them out on it and use what powers he has to bear down on them somewhat if they don’t stop.
It might not get all of them to stop (some might risk fines because the profits would be greater), but hopefully it will direct the anger towards the actual culprits - big companies taking advantage of past inflation to raise prices.
People are looking at inflation dropping, thinking that’s an immediate fix. They’re forgetting that inflation is a measure of velocity. The ground that prices gained isn’t being eaten back up unless inflation goes to an effective negative compared to income.
Personal feelings aside, those are the numbers. Empirical evidence that what people think is just plain wrong. Why? I suspect what Biden is saying is true.
Me and everybody I know are doing great. My empirical evidence seems to disagree with yours.
Too bad nothing can be done about that. If only someone, maybe a government agency, could collect all the data and determine how the country is doing as a whole.
Saying “the economy is turning up and things are getting better” when nothing changed is a lot different than saying “its all going to hell” when no one is struggling.
If you dont grok the difference, you were probably not at risk of the economy fucking you over like how people are frustrated about
But things have changed, that’s the point. While individual experiences vary, all the economic data this year has been pretty stellar.
Reducing inflation this fast without tanking the economy, and not just not tanking it, actually having pretty decent economic numbers is a major achievement.
When the Fed stated raising rates to curtail inflation almost everyone thought there was no way to do it without a recession, maybe a major one, and increasing unemployment 2-3X. The “soft landing” seemed like a naive hope. We’re not all the way there yet but it looks like they actually did it. Inflation is almost down to targets and at the same time, unemployment is still low, GDP growth is good, real wage growth beats inflation, etc.
It’s not all blowjobs and caviar for everyone but we were heading for a major disaster and it’s been avoided.
Everyone has personal experiences which shape their thinking, that doesn’t mean their thinking is correct or even any more true than someone else’s. I can trust that I feel what 2 feet is on a board, but it’s better if I measure it before I cut it.
If I want to measure a board, I don’t consult a magazine*. I use a tape measure.
Similarly, if I want to know how I’m doing financially, I’ll check my bank account balance before the network that continues to employ Jim Cramer.
*even if I were measuring in potrzebie, I would convert from the imperial units already on my tape measure instead of hunting down a copy of MAD Magazine issue 26. I respect Donald Knuth, but there are limits.
Oh wow. That CNBC article is conflating less inflation with deflation. And where they have to provide numbers they don’t tell you how that 1 percent decrease in chicken is after a huge run up. (And every other product in the grocery section there.)
I knew CNBC was an economic gaslighter but this is Fox News level of wordplay to make people think the opposite of what the actual information says. Even to the point of saying less inflation is deflation. Inflation is a measure of velocity. Going slower is not going in reverse.
And the Forbes one is a paywall.
The basic problem here is that while inflation is slowing and wages are rising, inflation being a net negative against wages for a single year isn’t enough. It’s not enough to make up all the ground lost to inflation over the decades, and the run away inflation we experienced recently. As a reminder, this is 2023. The Pandemic effectively ended in 2020. Three years ago. So what was net inflation in 2021 and 2022?
Well gee I actually have those numbers. 3.7 in 2021, and 7 in 2022. That’s net inflation, so inflation against median wage increase. The net inflation this year would need to be -10.7 to wipe out the difference created in those two years. We don’t have full numbers yet but it looks like about 5 percent median wage increase and 3 percent inflation.
So you have -2 net inflation this year. Yay. We’re still down by 8 points. But that’s okay it’s just a particularly big add to the 139 points we’re down since 1974.
Infinite substantive growth is impossible. Infinite monetary growth is possible. The entire point of fiat currency is to not limit it with physical items.
Okay, let’s say infinite growth is impossible. That seems intuitive. If that’s true, where’s the ceiling? It sounds like you’re worried that we’re going to hit it and bounce off, so maybe we should be planning for this event. What would be the best things for us to do as a species to prepare for this potentially cataclysmic event?
Money is made up and stupid
You’re made up and stupid. 😂 Just kidding, money IS made up, but it certainly isn’t stupid. Money doesn’t have any inherent intelligence, obviously, but I think your implying that we are stupid to keep using it as a medium of exchange? What would be a better alternative? Going back to the barter system?
Idk, money definitely seems better than that. It allows for greater skill specialization and for the construction of more complex economic systems. I know that can seem scary because there’s so much going on to keep track of, but arguably most people participating in society prefer it this way.
Lol the people in this thread are piiiiiiiiiiiiissed. I’ve never seen factual, tame macroeconomics 101 get downvoted so hard like this.
Lemmings know a lot about operating systems, but by god do they make Raegan look like a triple PhD in economics.
“Deflation is bad” is somehow a hot take around here because it’s either “I want prices to be back at 2019 levels and I refuse to hear that the resulting crisis will be worse than the Great Depression” or “I want to intentionally crash the economy to starve half the population to death and implement my stalinist policies. not necessarily in that order”.
Or, deflation is bad isn’t economics 101. It certainly wasn’t when I took economics 101. What’s bad is deflationary death spirals. Those have certain causes though and aren’t just something that happens with mild deflation over a long term. We know this because Japan actually went though a long period of mild deflation. And they aren’t having a great depression.
For the record hyper inflationary death spirals are also possible. But nobody in finance wants to demonize inflation because that’s how they get paid. Fun fact, a fast way to get a hyper inflationary cycle is to print a shit ton of money and only give it to rich people. Then have a ton of credit build up and get it all called in at the same time. We aren’t quite there yet, but not for lack of trying!
This is important to the modern economy because so much of our financial system is predicated on this principle.
For example, in the US, 30 year fixed rate mortgages are wildly popular, in no small part due to this idea. When one takes out one of these loans, the payments earlier in the loan might be rough. Over the years, due in part to inflation, personal income (generally) increases, but loan payments don’t. This makes it easier to pay down the loan over time. By the end of the 30 year loan period, typically the mortgage payment is a much smaller proportion of income. Conversely, if the economy experiences deflation, then it gets harder over time to pay off the loan.
Now expand this principle to institutional loans, government securities, etc and you’ll likely see why it is imperative to policymakers to avoid deflation.
That’s all true. But out doesn’t really become a problem for people unless wages deflate too. Which in this example we would be avoiding. And one of the ways to keep deflation mild would be for the government to keep making those loan payments as only it can.
Keep in mind we have the inverse problem right now. Inflation keeps increasing that starting cost and no matter how much many people save, they can’t get on that mortgage. They get 10 percent saved and then find out it’s actually 5 percent. Then they get the new ten percent saved and find out it’s 8 percent. By the time they actually get 10 percent saved they’re looking at paying a mortgage well into retirement unless they save more.
Closing the wage and inflation gap is healthier in the long run and we know it can be done without catastrophe. The way we’re currently headed is going to leave the base of our economic pyramid starving and in the streets. Which isn’t good for anyone.
I think that counts as economics 102. I’ll freely admit that I don’t have the necessary knowledge to debate you on this level.
What annoys me is that the typical level of economic discussion on lemmy is “they say inflation is back to normal and yet things are more expensive than they were in 2019. GOTCHA.”
Yeah that annoys me too. The biggest gap in understanding is that inflation is a measure of velocity. So you have one side expecting prices to fall and the other side expecting wages to magically beat the baked in cost of living increases from previous years after a few months.
One way to make it clear is to take the inflation of the median wage and compare it to core inflation. By that measure wages are down 139 points since 1974. Mild deflation while wages hold steady wouldn’t be an inappropriate way to fix that gap without printing more money or taking anything directly from the wealthy. (Something America is historically bad at.)
We don’t need actual deflation. We need years of wages beating inflation. They aren’t the same thing. And mild deflation actually helps people on a paycheck to paycheck existence. It hurts savings and stocks.
That’s not why people are feeling pessimistic. Too much of the economic recovery is going to corporate profits and capitalist shareholders. The federal minimum wage is still half of a poverty wage, and the rent is still too damn high. The hyperinflation of the pandemic has made working for a living unsustainable. Taking inflation from 9% to 3% is great (setting aside for this conversation that any President shouldn’t really take credit for economic matters) but it’s reduce the rate at which a bad thing is getting worse. Existence is still unaffordable even with everybody employed. That’s not spin, that’s just the reality we’ve all been living in for a long time. The twin disasters of Trump and the pandemic put it all in stark relief, laying bare the grift of conservativism.
Biden is struggling because he’s trying to play old politics. We’ve crossed the rubicon. Going back to normal isn’t enough for people to feel hopeful, and reducing the rate of collapse isn’t leadership. Biden thinks being at the helm while the ship slowly rights itself is the same as leadership, and there are enough people attacking him from the extreme other side that nobody is particularly happy with him.
Everything you said is absolutely true and I agree with what is and should be happening.
However, the article is saying that surveyed people think the economy is crashing and unemployment is high.
I think it’s fair for Biden to say, “hey, you fuckers keep telling me you want capitalism. This is what capitalism looks like. This is success in capitalism. It’s up to the unions at this point in a capitalist system.”
Even though like you said it isn’t working. But not for the reasons why media makes it seem, which is what turns people to the right thinking that more extreme capitalism and deregulation will fix it!
The looming recession talk is over. They’re ready to start making real money in the stock market again and are tired of the impact the recession talk had this year. It’s no surprise that it’s been about bang on a year since the recession talk started as we came into 2023 and the stock market hit record highs as we’re coming into 2024.
It was all fabricated for… reasons. Big orgs wanted to lay people off for some reason. Investment bankers wanted to gobble up securities for cheaper. Real estate firms wanted to drive down the real cost of homes (higher interest rates = lower sale price but higher cost to families, firms benefit by paying cash). They wanted it so they made it happen. They no longer want it so it’ll end.
Indeed. Much as though I like my payments from JP Morgan, Jamie Diamon was one of the first to scream recession. He did that to increase his own wealth, not any other reason.
That’s true but peoples wages haven’t gone up at a rate that keeps pace so everyone still feels poor and can’t buy the things they need. That’s the big issue. That’s not been fixed and there is no plan to fix it. Now we all just have to wait around until our wages start to increase but we all know how long that takes.
The problem is that there is no way to fix it without fucking shit up worse. Attempting to create deflation is bad for everyone as the economy will stop growing which will lead to job loss. A recession is another way to get it done, but then that would require high levels of unemployment, and still won’t bring prices down.
We’re seeing the best possible outcome right now where inflation is down and wages are rising faster than it, and housing prices are coming down, meaning we are on track for the issue of unaffordability to go away. The Fed seems to have pulled off what most people thought was impossible: a soft landing.
We’re possibly witnessing something absolutely amazing. This is not to detract from the struggles people are experiencing, but the fact that they don’t recognize how much better off they are then how it could have been is disappointing.
When I read the Forbes link I provided, I see that wages kept place with inflation for the last 2 and a half years. When I look at the news, I see unions getting wage consessions. Inflation was a factor, but that’s been mitigated
The 10% of union wages should still impact the rest of the industry, so the 10% of the workforce getting raises and concessions will force other companies to increase wages or benefits, even if it isn’t as much as the unions’ increases.
Rapidcreek was attempting to make the case that working class conditions are stable and rising. His points of union gains ignore vast swaths of people’s material reality. Unions gaining ground in the past year is a great point, one I am not denying, however those gain are a very small fraction of the already small fraction of unionized workers.
Many of the contracts left many workers out of improvements. The UPS contract won by Teamsters for example was very vocal about how it ended a two tier pay scale system, but in reality it just created a new one for part time workers hired after the contract was signed. That’s not to diminish from the gains made, but UPS’s current model requires a huge segment of their work force to be part time, as they have high volume rush periods where inbound/outbound needs to be recieved/shipped quickly as their floor space cannot accommodate the volume. Those part time workers are essential so why should they be payed at a lower scale than full time employees? Many of those part time workers aren’t as involved in union organizing and Teamsters have done a poor job bringing them into the fold, so when they vault their 85% approval of the contract, they neglect to mention what percentage didn’t participate.
That is one example of how many of the gains won aren’t what they appear at face value. Mainstream media also does a poor job reporting these nuances in labor fights. So again yes things are improving, but definitely not for everyone and it’s not the rosy picture Rapidcreek was trying to paint.
You mean the paywalled link and the gaslighting CNBC article? The government’s own numbers put median wage increase vs inflation at -8 for the 2021-2023 period.
Americans are not stupid. You will not convince them the economy is good by spitting out some numbers twisted from the data. They feel it. They know how easy or hard it is to make ends meet. They know their rent goes up every year while their wages do not.
And the harder is gets, the more radical the population becomes. Establishment democrats like Biden will not be able to maintain the status quo. Normally I wouldn’t care but their incompetence has consequences. A Trump victory at this point may signal the end of the US as we know it. We cannot continue to stay asleep at the wheel.
Your purchasing power has fallen over 20% in the last 3 years. We’re talking and average of around 7% real inflation per year. Not the official “~3%” the government puts out. That’s over 3x higher than average over the last 4 decades.
The economy has been bad, but that doesn’t change that it is getting better on many important metrics. These are leading indicators, predicting what will be, but the effects that people are feeling are more like lagging indicators that are reacting to the past and present. Hopefully we see these predictions play out in the next year before the election and into the next presidency.
What we’re going to see is a slight boost in the coming months as the federal reserve lowers the interest rate (by coincidence, also an election year 🤔)
But with the interest rate going down, the main barrier holding us back from higher inflation is being torn down. What will be the consequences of this? Prices will rise.
I think they are betting that the Ukrainian war ends in the next few months. If not ends, at least becomes a frozen conflict. This would remove a large inflationary pressure from the global system.
It’s a gamble. Perhaps they even are negotiating with Russia behind the scenes. Russian high-level officials were spotted flying to DC last week.
We’ll have to see. Hopefully they can end the war and lower interest rates. That would in effect give a large boost right before the 2024 election. Is that enough to pry the election away from Trump? I don’t know. Biden is incredibly unpopular (even more unpopular than Trump at this same time! One of the least popular presidents in history).
The problem is the goal of “overthrow the shackles of oppression” may be a valid goal with class self interest in mind…
But that desire can be manipulated into accomplishing the opposite. And the populist right has shown their ability to harness the fear and insecurity that is growing in this country.
We desperately need a renewed leftist movement that the average American can get behind. Without some sort of mass movement soon, I see things getting worse before they get better.
They forget that the second option is followed by feudalism. Do they want to be serfs? Because they will be literal property of the aristocratic classes if they elect Trump and let him destroy the constitution.
Fuedalism may seem like a utopian pipe dream with what is possible. Imagine a transition to an authoritarian surveillance capitalism state (something like China).
With AI, they can even read your thoughts. You get booked into the police because of something you posted online anonymously, they interrogate you while they read your thoughts. You believe in communism? Terrorist -> prison.
These things can happen faster than we expect. Hitler took Germany from a democracy to a hell hole in less than a decade.
It looks like all countries in the world are slowly converging on a mixture of the US and Chinese system. Capitalist corporations endowed with power by the state. No free market - a few large companies are easier to control. Strong executive power and theater democracy. Large prison populations.
Also, this isn’t unique to Trump. The Democrats would bring us to the same destination, just slower. We need a new left. A mass movement like the mass protests of the 60s. That has historically been the only thing that can bring real and significant positive change to the American people.
I prefer not to depend on feelings. My feelings can sometimes be wrong… isolated data is not a prefered indicator, because it must be interpreted to be meaningful.
I’ve put several links in this string that should address your point.
Feelings decide elections, not numbers. And a large majority of Americans do not have confidence in the economy.
These people, living day in and out under the system intuitively understand their position, even if they can’t spit out figures at you. They recognize their lives are harder than their grandparents. They recognize they are working for less year after year.
Many of us are privileged- I know I am. We make good money working from home, not having any issues paying our expenses and saving for the future.
But we cannot let that privilege blind us into believing misleading optimistic figures. We are on the edge of a precipice, both economically, financially, and militarily. If the left doesn’t do something soon, we will lose the next decade to fascism.
I understand. The fact is, however, that the economy is doing well by all measurements. These are figures, not optimistic, just numbers. The US came out of the pandemic economic depression robustly. Also, the fact is that the top percentile has accumulated wealth at unprecedented rates. I suspect we are on the cusp of a generational shift when higher paid older workers retire to be replaced by younger workers. That can never happen fast enough for the younger.
I understand. The fact is, however, that the economy is doing well by all measurements.
The only measurement that counts to any voter is the one on their own bank statement. Tell them the economy is doing great all you want. It may even be true. If they’re having to decide which utility bill to not pay this month, they’re unlikely to give your data greater weight than their datum.
And he responded. Are those the end of your argument? Because as other poster said, statistics can be used to lie just as well as inform. You are familiar with this, correct?
If you have the stomach for getting in to the nitty gritty, pick one of your metrics and ill explain patiently why theyre bullshit.
So, you want me address your data without addressing mine? I’m not going to get into an hour debate on a chat board for no ther reason but it bores me. Sorry.
Pandemic-disrupted supply chains are pretty much righted. Inflation is already back near normal levels. Labor shortages have eased. The Federal Reserve is poised to cut interest rates next year.
We’ll still get a thousand stories about a looming recession.
Inflation is back near normal, but prices are not, and wages have not shifted to match those prices (partially due to the government fighting “wage inflation”). People are still worse off than they used to be. I don’t think this is Biden’s fault, but here we are anyway.
Biden has called this out. A lot of companies are still raising prices or aren’t letting prices fall. They’re still saying “oh, this is inflation causing this” while their costs fall and their profits rise.
Biden can’t stop them singlehandedly. (He’s a President, not a Supreme Dictator.) But he can call them out on it and use what powers he has to bear down on them somewhat if they don’t stop.
It might not get all of them to stop (some might risk fines because the profits would be greater), but hopefully it will direct the anger towards the actual culprits - big companies taking advantage of past inflation to raise prices.
No but since he couldn’t stop them he decided the working class would pay the price and had the Federal Reserve fuck over the American people.
The Federal Reserve is independent of the President. They technically answer to Congress, but in reality it’s to the big banks.
Powell was reappointed by Biden. Biden is responsible for what Powell does.
Free markets will stop that if they just let them. Unless there’s an actual cartel.
People are looking at inflation dropping, thinking that’s an immediate fix. They’re forgetting that inflation is a measure of velocity. The ground that prices gained isn’t being eaten back up unless inflation goes to an effective negative compared to income.
https://www.cnbc.com/2023/12/13/deflation-inflation-november-2023-in-one-chart.html
https://fortune.com/2023/12/12/wage-growth-exceeded-inflation-jec-democrats/
Those articles sure dont reflect the reality of me or anyone I know, by even a smidge
Personal feelings aside, those are the numbers. Empirical evidence that what people think is just plain wrong. Why? I suspect what Biden is saying is true.
Empirical evidence says I still have to skip grocery trips, and cant afford to fix my car.
So… I trust my lived in life over your numbers
Me and everybody I know are doing great. My empirical evidence seems to disagree with yours.
Too bad nothing can be done about that. If only someone, maybe a government agency, could collect all the data and determine how the country is doing as a whole.
Saying “the economy is turning up and things are getting better” when nothing changed is a lot different than saying “its all going to hell” when no one is struggling.
If you dont grok the difference, you were probably not at risk of the economy fucking you over like how people are frustrated about
But things have changed, that’s the point. While individual experiences vary, all the economic data this year has been pretty stellar.
Reducing inflation this fast without tanking the economy, and not just not tanking it, actually having pretty decent economic numbers is a major achievement.
When the Fed stated raising rates to curtail inflation almost everyone thought there was no way to do it without a recession, maybe a major one, and increasing unemployment 2-3X. The “soft landing” seemed like a naive hope. We’re not all the way there yet but it looks like they actually did it. Inflation is almost down to targets and at the same time, unemployment is still low, GDP growth is good, real wage growth beats inflation, etc.
It’s not all blowjobs and caviar for everyone but we were heading for a major disaster and it’s been avoided.
~Yall this is NOT empirical, but anecdotal~. That said, I wish you prosperity and only happy feelings (:
edit: I am sarcasm blind, apparently
Yeah…we know. It’s pretty clear wildginger was using it sarcastically and I was using the same words as them.
Everyone has personal experiences which shape their thinking, that doesn’t mean their thinking is correct or even any more true than someone else’s. I can trust that I feel what 2 feet is on a board, but it’s better if I measure it before I cut it.
If I want to measure a board, I don’t consult a magazine*. I use a tape measure.
Similarly, if I want to know how I’m doing financially, I’ll check my bank account balance before the network that continues to employ Jim Cramer.
*even if I were measuring in potrzebie, I would convert from the imperial units already on my tape measure instead of hunting down a copy of MAD Magazine issue 26. I respect Donald Knuth, but there are limits.
Oh wow. That CNBC article is conflating less inflation with deflation. And where they have to provide numbers they don’t tell you how that 1 percent decrease in chicken is after a huge run up. (And every other product in the grocery section there.)
I knew CNBC was an economic gaslighter but this is Fox News level of wordplay to make people think the opposite of what the actual information says. Even to the point of saying less inflation is deflation. Inflation is a measure of velocity. Going slower is not going in reverse.
And the Forbes one is a paywall.
The basic problem here is that while inflation is slowing and wages are rising, inflation being a net negative against wages for a single year isn’t enough. It’s not enough to make up all the ground lost to inflation over the decades, and the run away inflation we experienced recently. As a reminder, this is 2023. The Pandemic effectively ended in 2020. Three years ago. So what was net inflation in 2021 and 2022?
Well gee I actually have those numbers. 3.7 in 2021, and 7 in 2022. That’s net inflation, so inflation against median wage increase. The net inflation this year would need to be -10.7 to wipe out the difference created in those two years. We don’t have full numbers yet but it looks like about 5 percent median wage increase and 3 percent inflation.
So you have -2 net inflation this year. Yay. We’re still down by 8 points. But that’s okay it’s just a particularly big add to the 139 points we’re down since 1974.
Deflation is bad. I promise you do not want what you are suggesting is required.
Infinite growth is impossible. Money is made up and stupid.
Infinite substantive growth is impossible. Infinite monetary growth is possible. The entire point of fiat currency is to not limit it with physical items.
Okay, let’s say infinite growth is impossible. That seems intuitive. If that’s true, where’s the ceiling? It sounds like you’re worried that we’re going to hit it and bounce off, so maybe we should be planning for this event. What would be the best things for us to do as a species to prepare for this potentially cataclysmic event?
You’re made up and stupid. 😂 Just kidding, money IS made up, but it certainly isn’t stupid. Money doesn’t have any inherent intelligence, obviously, but I think your implying that we are stupid to keep using it as a medium of exchange? What would be a better alternative? Going back to the barter system?
Idk, money definitely seems better than that. It allows for greater skill specialization and for the construction of more complex economic systems. I know that can seem scary because there’s so much going on to keep track of, but arguably most people participating in society prefer it this way.
Lol the people in this thread are piiiiiiiiiiiiissed. I’ve never seen factual, tame macroeconomics 101 get downvoted so hard like this.
Lemmings know a lot about operating systems, but by god do they make Raegan look like a triple PhD in economics.
“Deflation is bad” is somehow a hot take around here because it’s either “I want prices to be back at 2019 levels and I refuse to hear that the resulting crisis will be worse than the Great Depression” or “I want to intentionally crash the economy to starve half the population to death and implement my stalinist policies. not necessarily in that order”.
Or, deflation is bad isn’t economics 101. It certainly wasn’t when I took economics 101. What’s bad is deflationary death spirals. Those have certain causes though and aren’t just something that happens with mild deflation over a long term. We know this because Japan actually went though a long period of mild deflation. And they aren’t having a great depression.
For the record hyper inflationary death spirals are also possible. But nobody in finance wants to demonize inflation because that’s how they get paid. Fun fact, a fast way to get a hyper inflationary cycle is to print a shit ton of money and only give it to rich people. Then have a ton of credit build up and get it all called in at the same time. We aren’t quite there yet, but not for lack of trying!
Yeah, IMO, the biggest thing to remember about inflation is that interest rates (the cost of borrowing) factors a certain level of inflation into the calculation. If you haven’t taken an interest in finance, this piece isn’t always obvious.
This is important to the modern economy because so much of our financial system is predicated on this principle.
For example, in the US, 30 year fixed rate mortgages are wildly popular, in no small part due to this idea. When one takes out one of these loans, the payments earlier in the loan might be rough. Over the years, due in part to inflation, personal income (generally) increases, but loan payments don’t. This makes it easier to pay down the loan over time. By the end of the 30 year loan period, typically the mortgage payment is a much smaller proportion of income. Conversely, if the economy experiences deflation, then it gets harder over time to pay off the loan.
Now expand this principle to institutional loans, government securities, etc and you’ll likely see why it is imperative to policymakers to avoid deflation.
That’s all true. But out doesn’t really become a problem for people unless wages deflate too. Which in this example we would be avoiding. And one of the ways to keep deflation mild would be for the government to keep making those loan payments as only it can.
Keep in mind we have the inverse problem right now. Inflation keeps increasing that starting cost and no matter how much many people save, they can’t get on that mortgage. They get 10 percent saved and then find out it’s actually 5 percent. Then they get the new ten percent saved and find out it’s 8 percent. By the time they actually get 10 percent saved they’re looking at paying a mortgage well into retirement unless they save more.
Closing the wage and inflation gap is healthier in the long run and we know it can be done without catastrophe. The way we’re currently headed is going to leave the base of our economic pyramid starving and in the streets. Which isn’t good for anyone.
I think that counts as economics 102. I’ll freely admit that I don’t have the necessary knowledge to debate you on this level.
What annoys me is that the typical level of economic discussion on lemmy is “they say inflation is back to normal and yet things are more expensive than they were in 2019. GOTCHA.”
Yeah that annoys me too. The biggest gap in understanding is that inflation is a measure of velocity. So you have one side expecting prices to fall and the other side expecting wages to magically beat the baked in cost of living increases from previous years after a few months.
One way to make it clear is to take the inflation of the median wage and compare it to core inflation. By that measure wages are down 139 points since 1974. Mild deflation while wages hold steady wouldn’t be an inappropriate way to fix that gap without printing more money or taking anything directly from the wealthy. (Something America is historically bad at.)
You were confidently casting aspersions earlier.
We don’t need actual deflation. We need years of wages beating inflation. They aren’t the same thing. And mild deflation actually helps people on a paycheck to paycheck existence. It hurts savings and stocks.
That’s not why people are feeling pessimistic. Too much of the economic recovery is going to corporate profits and capitalist shareholders. The federal minimum wage is still half of a poverty wage, and the rent is still too damn high. The hyperinflation of the pandemic has made working for a living unsustainable. Taking inflation from 9% to 3% is great (setting aside for this conversation that any President shouldn’t really take credit for economic matters) but it’s reduce the rate at which a bad thing is getting worse. Existence is still unaffordable even with everybody employed. That’s not spin, that’s just the reality we’ve all been living in for a long time. The twin disasters of Trump and the pandemic put it all in stark relief, laying bare the grift of conservativism.
Biden is struggling because he’s trying to play old politics. We’ve crossed the rubicon. Going back to normal isn’t enough for people to feel hopeful, and reducing the rate of collapse isn’t leadership. Biden thinks being at the helm while the ship slowly rights itself is the same as leadership, and there are enough people attacking him from the extreme other side that nobody is particularly happy with him.
Everything you said is absolutely true and I agree with what is and should be happening.
However, the article is saying that surveyed people think the economy is crashing and unemployment is high.
I think it’s fair for Biden to say, “hey, you fuckers keep telling me you want capitalism. This is what capitalism looks like. This is success in capitalism. It’s up to the unions at this point in a capitalist system.”
Even though like you said it isn’t working. But not for the reasons why media makes it seem, which is what turns people to the right thinking that more extreme capitalism and deregulation will fix it!
The looming recession talk is over. They’re ready to start making real money in the stock market again and are tired of the impact the recession talk had this year. It’s no surprise that it’s been about bang on a year since the recession talk started as we came into 2023 and the stock market hit record highs as we’re coming into 2024.
It was all fabricated for… reasons. Big orgs wanted to lay people off for some reason. Investment bankers wanted to gobble up securities for cheaper. Real estate firms wanted to drive down the real cost of homes (higher interest rates = lower sale price but higher cost to families, firms benefit by paying cash). They wanted it so they made it happen. They no longer want it so it’ll end.
Indeed. Much as though I like my payments from JP Morgan, Jamie Diamon was one of the first to scream recession. He did that to increase his own wealth, not any other reason.
That’s true but peoples wages haven’t gone up at a rate that keeps pace so everyone still feels poor and can’t buy the things they need. That’s the big issue. That’s not been fixed and there is no plan to fix it. Now we all just have to wait around until our wages start to increase but we all know how long that takes.
The problem is that there is no way to fix it without fucking shit up worse. Attempting to create deflation is bad for everyone as the economy will stop growing which will lead to job loss. A recession is another way to get it done, but then that would require high levels of unemployment, and still won’t bring prices down.
We’re seeing the best possible outcome right now where inflation is down and wages are rising faster than it, and housing prices are coming down, meaning we are on track for the issue of unaffordability to go away. The Fed seems to have pulled off what most people thought was impossible: a soft landing.
We’re possibly witnessing something absolutely amazing. This is not to detract from the struggles people are experiencing, but the fact that they don’t recognize how much better off they are then how it could have been is disappointing.
When I read the Forbes link I provided, I see that wages kept place with inflation for the last 2 and a half years. When I look at the news, I see unions getting wage consessions. Inflation was a factor, but that’s been mitigated
You’re speaking as if the majority of American workers are in a union.
It is true that the success of unions on wages effects the wages of non union workers,
Yes but when union membership is only at 10% what impact are you really talking about nationwide?
The 10% of union wages should still impact the rest of the industry, so the 10% of the workforce getting raises and concessions will force other companies to increase wages or benefits, even if it isn’t as much as the unions’ increases.
Rapidcreek was attempting to make the case that working class conditions are stable and rising. His points of union gains ignore vast swaths of people’s material reality. Unions gaining ground in the past year is a great point, one I am not denying, however those gain are a very small fraction of the already small fraction of unionized workers.
Many of the contracts left many workers out of improvements. The UPS contract won by Teamsters for example was very vocal about how it ended a two tier pay scale system, but in reality it just created a new one for part time workers hired after the contract was signed. That’s not to diminish from the gains made, but UPS’s current model requires a huge segment of their work force to be part time, as they have high volume rush periods where inbound/outbound needs to be recieved/shipped quickly as their floor space cannot accommodate the volume. Those part time workers are essential so why should they be payed at a lower scale than full time employees? Many of those part time workers aren’t as involved in union organizing and Teamsters have done a poor job bringing them into the fold, so when they vault their 85% approval of the contract, they neglect to mention what percentage didn’t participate.
That is one example of how many of the gains won aren’t what they appear at face value. Mainstream media also does a poor job reporting these nuances in labor fights. So again yes things are improving, but definitely not for everyone and it’s not the rosy picture Rapidcreek was trying to paint.
You mean the paywalled link and the gaslighting CNBC article? The government’s own numbers put median wage increase vs inflation at -8 for the 2021-2023 period.
Americans are not stupid. You will not convince them the economy is good by spitting out some numbers twisted from the data. They feel it. They know how easy or hard it is to make ends meet. They know their rent goes up every year while their wages do not.
And the harder is gets, the more radical the population becomes. Establishment democrats like Biden will not be able to maintain the status quo. Normally I wouldn’t care but their incompetence has consequences. A Trump victory at this point may signal the end of the US as we know it. We cannot continue to stay asleep at the wheel.
Your purchasing power has fallen over 20% in the last 3 years. We’re talking and average of around 7% real inflation per year. Not the official “~3%” the government puts out. That’s over 3x higher than average over the last 4 decades.
The economy has been bad, but that doesn’t change that it is getting better on many important metrics. These are leading indicators, predicting what will be, but the effects that people are feeling are more like lagging indicators that are reacting to the past and present. Hopefully we see these predictions play out in the next year before the election and into the next presidency.
What we’re going to see is a slight boost in the coming months as the federal reserve lowers the interest rate (by coincidence, also an election year 🤔)
But with the interest rate going down, the main barrier holding us back from higher inflation is being torn down. What will be the consequences of this? Prices will rise.
I think they are betting that the Ukrainian war ends in the next few months. If not ends, at least becomes a frozen conflict. This would remove a large inflationary pressure from the global system.
It’s a gamble. Perhaps they even are negotiating with Russia behind the scenes. Russian high-level officials were spotted flying to DC last week.
We’ll have to see. Hopefully they can end the war and lower interest rates. That would in effect give a large boost right before the 2024 election. Is that enough to pry the election away from Trump? I don’t know. Biden is incredibly unpopular (even more unpopular than Trump at this same time! One of the least popular presidents in history).
When it comes to “literal starvation” or “overthrow the shackles of oppression” I have a fair idea of what a lot of locals will choose.
The problem is the goal of “overthrow the shackles of oppression” may be a valid goal with class self interest in mind…
But that desire can be manipulated into accomplishing the opposite. And the populist right has shown their ability to harness the fear and insecurity that is growing in this country.
We desperately need a renewed leftist movement that the average American can get behind. Without some sort of mass movement soon, I see things getting worse before they get better.
I hope unions accomplish this. All our political parties are unwilling to.
They forget that the second option is followed by feudalism. Do they want to be serfs? Because they will be literal property of the aristocratic classes if they elect Trump and let him destroy the constitution.
Fuedalism may seem like a utopian pipe dream with what is possible. Imagine a transition to an authoritarian surveillance capitalism state (something like China).
With AI, they can even read your thoughts. You get booked into the police because of something you posted online anonymously, they interrogate you while they read your thoughts. You believe in communism? Terrorist -> prison.
These things can happen faster than we expect. Hitler took Germany from a democracy to a hell hole in less than a decade.
It looks like all countries in the world are slowly converging on a mixture of the US and Chinese system. Capitalist corporations endowed with power by the state. No free market - a few large companies are easier to control. Strong executive power and theater democracy. Large prison populations.
Also, this isn’t unique to Trump. The Democrats would bring us to the same destination, just slower. We need a new left. A mass movement like the mass protests of the 60s. That has historically been the only thing that can bring real and significant positive change to the American people.
I prefer not to depend on feelings. My feelings can sometimes be wrong… isolated data is not a prefered indicator, because it must be interpreted to be meaningful.
I’ve put several links in this string that should address your point.
Feelings decide elections, not numbers. And a large majority of Americans do not have confidence in the economy.
These people, living day in and out under the system intuitively understand their position, even if they can’t spit out figures at you. They recognize their lives are harder than their grandparents. They recognize they are working for less year after year.
Many of us are privileged- I know I am. We make good money working from home, not having any issues paying our expenses and saving for the future.
But we cannot let that privilege blind us into believing misleading optimistic figures. We are on the edge of a precipice, both economically, financially, and militarily. If the left doesn’t do something soon, we will lose the next decade to fascism.
I understand. The fact is, however, that the economy is doing well by all measurements. These are figures, not optimistic, just numbers. The US came out of the pandemic economic depression robustly. Also, the fact is that the top percentile has accumulated wealth at unprecedented rates. I suspect we are on the cusp of a generational shift when higher paid older workers retire to be replaced by younger workers. That can never happen fast enough for the younger.
YES, THAT’S THE FUCKING PROBLEM
Yes, a large one…
The only measurement that counts to any voter is the one on their own bank statement. Tell them the economy is doing great all you want. It may even be true. If they’re having to decide which utility bill to not pay this month, they’re unlikely to give your data greater weight than their datum.
And he responded. Are those the end of your argument? Because as other poster said, statistics can be used to lie just as well as inform. You are familiar with this, correct?
If you have the stomach for getting in to the nitty gritty, pick one of your metrics and ill explain patiently why theyre bullshit.
(Good) Statistics don’t lie, but they can deceive.
So, you want me address your data without addressing mine? I’m not going to get into an hour debate on a chat board for no ther reason but it bores me. Sorry.
“I don’t want to put in the work but I’ll go through the effort of letting you know I’m not doing work instead of just ignoring you”
You can simply ignore people if you’re just going to use a lot of words to say nothing.
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No one has been talking about a recession lately. The stories have all been shit is too expensive for the majority of Americans.
And…well…they’re true.
https://www.cnbc.com/2023/12/13/deflation-inflation-november-2023-in-one-chart.html
You haven’t noticed? They’ve moved on to this election cycle’s migrant caravan. Like fucking clockwork.
Depends on how much of your income goes toward food.
Our food spend has tripled if not more over the past couple years.
If that was 2% of your net income, then spending 6% on food now isn’t so bad.
If food spend was 10% of your net income, then switching to paying 30% of your income is a big fucking problem.
Alternatively, “The Economy Is Booming And Everyone Is Doing Better, Here’s Why This Is Bad News For Biden!”
Well, consider me an a shitload of people I know and see stories about daily “nobody”
Sure as fuck feels like it’s already here for half the country.