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Culture War Roundup for the week of June 10, 2024

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The economy is as the 4chan guys say fake and gay. The Fed chairmen is openly saying the job numbers are overstated. There is a historically unprecedented massive difference between the establishment and the household survey. If you believe the household survey there has been basically no job growth overall AND an actual job loss for non immigrants. The establishment survey owes almost 60% of job growth to the birth/death calculation which is a big fudge factor. For that reason you have people like the chief economist at Bloomberg suggesting the household survey is more reliable.

Similarly you have fudge factors in inflation that can bring it way down. Summers showed using historic cpi calculation inflation was about 2x the historic rate. And inflation is still high compared to the 2010s and this is off an elevated base).

Finally, a lot of the soft data (eg manufacturing, service data) has been ugly or turning ugly suggesting a slow down in GDP. This despite the fact the government is borrowing a trillion dollars every hundred days so GDP growth (which counts government spending) should be stabilized. The problem with that is the government is probably crowding out beneficial private spending.

The stock market looks good but that’s basically been (when adjusted for inflation) higher P/E ratios and growth at the very top (AI tech boom — if there is no is there the market will tank). Like most things, when you look under the surface the market doesn’t actually look great.

When you add all of this up it doesn’t paint a rosy picture. Under Biden, household net worth on real terms hasn’t budged and that’s using official data. It has almost certainly gotten worse.

Every year people make these arguments about the inevitable debt collapse, yet things keep humming along. The last two major crisis-Covid and 2008 crisis-were not because of the national debt. As the economy keeps growing ,each trillion of extra debt is smaller relatively speaking. It only becomes a problem if somehow the economy has negative real growth combined with high borrowing costs. But economic slowdown is almost always correlated with lower interest rates and falling bond yields, reducing the debt burden. Emerging markets and small economies, in general, have the opposite problem in which falling growth and crisis leads to surging borrowing costs and falling local currency due to the 'flight to safety' trade. In this case, you are right.