Honest question---do you think your views about the state of the economy are falsifiable? What are some things you could see that would make you change your mind?
Here are some examples of things that if a few of them were happening at once would make me think the economy was bad:
- A few quarters of negative real GDP growth
- Big increases in unemployment
- Big increases in inflation
- Increasing household default or delinquency
- Increases in the number of people who say the economy is bad
BTW here's a list of things I think are not good in the economy, but these are all longer-to-medium term issues and I think my ability to forecast is not great. These things are themselves not directly bad but can cause bad things on the preceding list.
- Growing national debt with no real political way out (Ds want to keep doing dumb fiscal stimulus, Rs want to keep doing dumb fiscal stimulus (through tax cuts))
- Lack of housing supply (a national issue that's the sum of a thousand local issues)
- Lack of meaningful innovation (I increasingly think a ton of tech/vc stuff is run by charlatans and is totally fake and gay, including AI/LLM stuff)
- Low fertility (although the US is probably better situated here than anybody else)
Tomato
1yr ago
Put aside all the arguments about statistics or how to calculate inflation or whatever.
When asked how they’re doing economically, the vast majority of people say they’re doing well.
Maybe you aren’t doing well.
One way that could happen is that everyone else is actually doing badly but they’re all lying about it and the official statistics are also made up.
Another way that could happen is that even though most people are doing well, not everybody is, and unfortunately maybe you or friends are among those who aren’t. Fortunately things are very cyclical and dynamic idiosyncratically so this is unlikely to last for long.
I certainly have a view about which one is more likely (my view doesn’t require a bunch of people to be lying) but it’s not likely something that can be resolved on this forum.
The original poster is absolutely right though. This double standard with which this place scoffs at most “lived experiences” arguments but seems so vulnerable to it when the argument is on the “other side,” so to speak, really speaks to a lack of what you might call intellectual empathy.
Tomato
1yr ago
I’m sure he has some more complete and subtle model of the US government than I do, but isn’t it kind of strange on its face to say “yeah the Israel lobby has special influence over US policy but it’s no big deal because the actual government departments whose job it is to handle these matters have more influence?”
As an American citizen I would find it incredibly fucked up if Israel ever overrules the Pentagon or the State Department on anything.
Tomato
1yr ago
I genuinely don’t know what you’re looking for. People say they’re doing good. Dems think other people are doing good. Republicans, who also think they’re doing good, think other people are doing bad. I’m not sure who these other people republicans are worried about are but I hope things get better for them (in the minds of republicans!)
Tomato
1yr ago
I mean sure, if 3% vs 12% is what changes your mind then fine, but this seems like totally missing the point. I can find some other small sliver of consumption where prices are down or flat. Most people are out there acting concerned as if food is 50% of people’s spending.
Tomato
1yr ago
My economic life and the lives of everyone around me is incredibly good, so it’s useful for me to look at statistics to see how far-off people in different areas with different professions and backgrounds are doing. And when I look at the data it turns out they’re doing great too!
Tomato
1yr ago
The rhetorical dynamic is the following:
-
economists have thought really hard about how to measure inflation and have sophisticated data and tools to do it. They do their thing and say that year over year inflation is 4% or whatever.
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weird zerohedge people notice that mayonnaise prices at target are higher by 75% and from this conclude that the federal reserve is lying about inflation.
I think people in #2 get confused because food is so important to live while flat screen tvs are not. So when food prices go up they think a lot of people must be about to starve. It’s useful to point out to these confused people that food, while necessary to live, is so cheap relative to Americans’ income that food prices can increase a lot and it doesn’t really matter. Hence headline inflation can be low even though mayonnaise at target seems expensive, and nevertheless headline inflation is the thing we should care about.
Tomato
1yr ago
Well, experts think people’s situations are good, the consensus people have is that their own situation is good, and there’s a partisan split on whether they think others’ situations are good. There’s a little logic 101 game we can play here in identifying who is wrong about what.
Tomato
1yr ago
Throw whatever food categories you want, the point is people spend a tiny amount of their income on food.
In my area I had a buddy's rent jump up 25% in one year when he renewed.
Yeah I mean landlords are famously slow and chunky while adjusting. Sorry that happened to a guy you know.
The point is people are out here talking like there’s some conspiracy to hide the fact that prices 100% higher than they used to be when in fact they aren’t and wages have increased along with the modest price increases.
All that aside, the following facts:
- majorities think their own situation is good
- dems think others’ situations are good
- reps think others’ situations are bad
Really kind of gives away what’s happening, right?
Tomato
1yr ago
I see. I 100% agree with you then. This is a good example where experts are right and there's a big disconnect for people. Interesting why it breaks down so strongly on partisan lines though.
Tomato
1yr ago
"Housing costs" as defined in that link would be housing costs for someone becoming a homeowner for the first time. I agree that it's rough if you're a first-time homeowner but that's a pretty small slice of the population. Most people already have homes (so house price increases are good) and have fixed rate mortgages (so rate increases are irrelevant).
The rent chart you showed has rental prices increasing at about a 6-7% annual rate, which I agree is annoyingly high but doesn't seem catastrophic?
Staple foods are a pretty small share of people's consumption basket. (Food at home is about 4% of people's expenditures: https://www.ers.usda.gov/data-products/ag-and-food-statistics-charting-the-essentials/food-prices-and-spending/)
Ultimately you're getting at something correct, but I don't think in the way you meant it to be. There's a huge disconnect between what people think the economy is (that people mostly consume lettuce and mayonnaise and half of the economy are coal miners) and what it actually is.
Tomato
1yr ago
This is a weird thing to say because most people already own houses and they're financed through long-term fixed rate mortgages so when house prices go up they're happy and when interest rates increase it doesn't affect them. There is the so called mortgage lock-in effect but this is quantitatively small when compared to the former things (most people don't move that much anyway).
Anyway people who think house prices are too high should be complaining about local zoning laws that restrict supply, not Joe Biden.
Tomato
1yr ago
This is a great example of the above post because in fact people are much wealthier (adjusting for inflation) and have higher incomes (adjusting for inflation) all across the income distribution.
Tomato
1yr ago
There are a lot of economic data conspiracy theories out there but they can never point us to what data we're actually supposed to be looking at. What do you want us to consider aside from vibes and anecdotes? Anyway for your specific points:
Not to mention that "core inflation" excludes housing and gas and food
There's a lot to discuss on why it makes sense to think about non-core or core for the purposes of various policy decisions and evaluations. Nevertheless they are both calculated and easy for people to look up, and they are usually pretty close. Incidentally non-core inflation was lower in September than core inflation. https://www.bls.gov/news.release/pdf/cpi.pdf
as if home prices reaching unaffordable highs is some sort of triviality when The Economy Is Doing Great.
Since most people own homes this is in fact a good thing
Unemployment is good because the numbers are gamed in a million ways. A typical pattern these last few years has been for employment figures to be "better than expected" when first announced, then quietly revised to much lower numbers a few months later. But it's always been a gamed figure, when people who stop looking for work are no longer counted as employed.
Propose an alternate measure and defend it. The most obvious alternative that gets at what you're worried about is the labor force participation rate, which is also high and increasing. https://fred.stlouisfed.org/series/CIVPART. There are good reasons that this isn't the default measure but obviously the data is out there.
The economy is growing?
Yes, real output increased 4.9% year over year.
Remember when they changed the definition of a recession because they didn't want to admit we were in one?
They did not, but anyway whether we're technically in a recession or not is an even coarser economic measure than GDP growth (which is doing very well) so it's not clear why people harp on this so much.
The economy must be doing well, because we've proclaimed it. And since no one believes us, we have to understand what's causing all this irrationality.
They went out and measured it, and the found out that unemployment is low, GDP growth is high, and inflation, however you measure it, is coming down. As I said you are free to come up with and defend your own measures but you should come to the table with more than vibes and anecdotes.
Are Republicans just that impervious to the truth?
Republicans are doing a weird thing where they say their own situation is good but think that other people's situations are bad. It would be helpful to understand this phenomenon.
Tomato
1yr ago
I think this is completely consistent with the stats above. Your economic situation is good, you think other people's economic situation is bad, and the few homeless people (who are understandably very anecdotally salient) you see notwithstanding, almost everyone's economic situation is similar to yours.
I also think people are over-sensitive to anecdotes of what's going on in their own sector. Some tech people getting laid off is a nearly negligible part of the economy but if you're a tech person it obviously looms much much larger. A few days ago on twitter everyone was dunking on some VC guy who claimed we had a "rolling recession" because some industries were doing well and some not so well (this is a nonsensical concept to be clear).
Tomato
1yr ago
I'd love to see a survey where they ask people
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Wage growth and unemployment across sectors
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What share of the aggregate economy they think that sector is
and see if it's possible to attribute the disconnect to mainly (1) or (2), (and also whether people's implicit aggregation is way off). My guess would be that people are pretty good at (1) but very bad at (2) in a way that's correlated with political affiliation. If republicans think coal mining is 25% of the economy then maybe it makes sense that you think the overall economy sucks.
Tomato
1yr ago
GDP growth is surprisingly high for Q3 at 4.9%.
Nominal. Inflation gets into almost everything.
4.9 is inflation adjusted. https://www.bea.gov/news/2023/gross-domestic-product-third-quarter-2023-advance-estimate.
Tomato
1yr ago
That’s really a wild assertion about what anti-zionists want especially considering how many of them are liberal Jews. Having spent an unusually high amount of time on college campuses, 99% of anti-Zionism there falls somewhere between “the Israeli state should stop allowing settlements in the West Bank” and “Israel shouldn’t be an explicitly ethno-religious Jewish state.” If you want to call things on that spectrum “anti-semitism,” fine, but it means you’re going to dramatically over-worry about the number of “anti-semites.”
Tomato
1yr ago
Colleges have always been super anti-Zionist. You don’t have to be a Ben Shapiro weirdo to know that.
The only thing that seems different now is that the Nikki Haleys of the world are explicitly saying that anti-Zionism is anti-semitism, so the activist college students are saying “ok guess I’m anti-Semitic too.”
It’s the same phenomenon that people talk about here re: racism. You call everything racist and eventually people start saying “ok guess I’m racist.”
Tomato
1yr ago
If it’s already big then yes most of the growth is through growth of the investments. Despite what they say, and despite a lot of smoothing and fudging, VC/PE/hedge funds make money when equity markets go up and lose money when equity markets go down, so investing into that stuff isn’t really a secret sauce.
On the other hand, university endowments are a huge slice of business for these funds, so Harvard & similar pulling out of Pershing Square is way way worse for Pershing Square than Bill Ackman taking his (relatively small) ball and going home is bad for Harvard.
Harvard’s endowment is huge, and everyone could stop donating right now and Harvard wouldn’t notice. If Griffin or Ackman or whatever Twitter busybody billionaire thinks Harvard cares about them, or even notices who they are, they are seriously high on their own supply.
There’s also a less public issue where a lot of these donations are shadily (though not-publicly) invested via the endowment management company into the donors’ PE or VC or hedge funds at exorbitant fees (for a hint of this, check out the composition of Stanford’s board) so their pulling out isn’t costless from the donor’s perspective.
Tomato
1yr ago
Can any republican supporters here or people who feel they can speak for republican supporters post their reactions to/opinions of this saga?
From the perspective of a moderate dem, basically pro-Biden guy, this really cements my view that the new crop of republicans are embarrassingly unserious clowns with no skill or interest in governing, and the people who elect them are just burn-it-to-the-ground sour grapes losers.
I know the “Russian interference” or “Chinese interference” is a dumb conspiracy theory but if I were a KGB guy this is exactly the kind of outcome I’d be aiming for.
Does anybody actually like what’s going on?
Tomato
1yr ago
It really is incredible that this is has widespread buy-in among serious people living in the west. Apparently an explicit ethnostate is something we should be aiming for and defending. Their ultimate aim is to establish explicit rules around this:
- Establish "the right to exercise national self-determination" in Australia is "unique to the Aboriginal people."
- Establish Aboriginal languages as Australia's official languages and downgrade English to a "special status."
- Establish "Aboriginal settlement as a national value" and mandate that the Australian state "will labor to encourage and promote its establishment and development."
You can read more here. Imagine if something like this actually became law in a nation purporting to be a liberal democracy.
I always thought it was ultra cringe to have these rando finance guys’ names plastered over everything in academia, which should be above that. Hopefully schools learn their lesson and stop bothering with these clowns.
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