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…
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.
Except food is still extremely expensive, and real peoples dollars arent worth more, or getting paid more. The economic data doesnt seem to take into account things that actually matter to people who dont wear suits and golf.
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.
Totally agree with the points you’re making. Policymakers don’t do nearly enough to support the economic base of the country. In the long run, that does have dire consequences.
Regarding housing prices, I think you already know this, but wanted to clarify that those are less of an inflation problem and more of a supply / demand problem. New housing supply collapsed after the 08 crisis and has been slow to recover since. Some have argued that once more of the boomers die off it will open up more supply, but I’m not fully convinced.
Unfortunately, I don’t see any quick fixes for the housing problems we’re facing. We need to advocate locally against NIMBYs and more broadly for programs to enhance access to housing, public transit, etc. We have lots of big problems but IMO public discourse gets bogged down arguing about semantics.
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.
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.
Except food is still extremely expensive, and real peoples dollars arent worth more, or getting paid more. The economic data doesnt seem to take into account things that actually matter to people who dont wear suits and golf.
~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.
Oh ok sorry! It seemed maybe wildginger needed my pedantry more maybe. (っ_)っ💗
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.
Totally agree with the points you’re making. Policymakers don’t do nearly enough to support the economic base of the country. In the long run, that does have dire consequences.
Regarding housing prices, I think you already know this, but wanted to clarify that those are less of an inflation problem and more of a supply / demand problem. New housing supply collapsed after the 08 crisis and has been slow to recover since. Some have argued that once more of the boomers die off it will open up more supply, but I’m not fully convinced.
Unfortunately, I don’t see any quick fixes for the housing problems we’re facing. We need to advocate locally against NIMBYs and more broadly for programs to enhance access to housing, public transit, etc. We have lots of big problems but IMO public discourse gets bogged down arguing about semantics.
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.