Inflation & vibecession; no good case for the 2% per year inflation target; never believe a “thought leader” who has been right once in the past; Dave Karpf has Michael Lewis’s number with respect...
"1. Physical lack of ability to buy desired goods or services.
[...]
The first of these isn’t worth me having a theory of because it doesn’t seem to be true, "
I'll return again to my thesis that the long-term effects of the Wall Street/investment capital/rollup godzillas attacking the housing market starting ~15 years ago, along with the Silicon Valley "disruptors" who have apparently been allowed to create housing price-fixing services without any response from the Justice Dept Antitrust Division or state regulators, is the root cause of much of what people are feeling as 'economic anxiety'. When you are paying a barely-makeable $1500/mo in rent in Chicago or Denver or LA but you know that the landlord is going to raise that to $2000/mo the next time the contract is up (hey, its inflation bub) and you will have no choice but to cut and cut the family budget to pay it because the buildings in the neighborhood have all raised to $2500/mo in mysterious synchronicity, well, you feel done by. Try saving and buying a house? The same investment firms are buying up available stocks and manipulating their prices ahead of you with the same algorithms. Move to Kansas City? The same thing has happened there, proportional to local salaries. And woe be to your offspring if they are ready and willing to go out in the world and set up their own household - rents on starter apartment are 10x what they were 30 years ago.
Driskill: "but also real costs to cutting government benefits over the next few decades. How about less "fiscal fearmongering" and more "watchful waiting?"…:"
How about taking seriously that borrowing to pay for expenditures that do not have NPV>0 is more of a drain on growth than taxing to pay for that kind of expenditure.
"Not catastrophic" is not the same as optimal or even good.
Konczal: Supply-Side Expansion Has Driven the Decline in Inflation
Translation: The greater the value of products for which prices can fall in absolute terms, the less inflation the Fed needs to produce to reduce them in relative terms in order that all markets can clear. ("markets clear" = no recession).
Konczal: "In the past two episodes I count as structural-adjustment inflations."
If the Fed does its job right, there will not be any other kind. This time it got inflation almost exactly right. Normally we do not praise surgeons for not killing their patients, but when other do, the one who does not deserves at least a commendation.
The Conference Board Consumer confidence jumped in December; both present situation and expectations were up. December's 'Jobs plentiful minus hard to get' was up 4.5 points over November's. That probably bodes well for the Dec payroll report early next month. The 6-month expectations of both employment and income improved. The 12-month expectations of inflation fell, while those of stock prices increased. Home- automobile-and appliance-buying plans rose. This is not the consumer that's about to roll over and faint!
Drezner:
"1. Physical lack of ability to buy desired goods or services.
[...]
The first of these isn’t worth me having a theory of because it doesn’t seem to be true, "
I'll return again to my thesis that the long-term effects of the Wall Street/investment capital/rollup godzillas attacking the housing market starting ~15 years ago, along with the Silicon Valley "disruptors" who have apparently been allowed to create housing price-fixing services without any response from the Justice Dept Antitrust Division or state regulators, is the root cause of much of what people are feeling as 'economic anxiety'. When you are paying a barely-makeable $1500/mo in rent in Chicago or Denver or LA but you know that the landlord is going to raise that to $2000/mo the next time the contract is up (hey, its inflation bub) and you will have no choice but to cut and cut the family budget to pay it because the buildings in the neighborhood have all raised to $2500/mo in mysterious synchronicity, well, you feel done by. Try saving and buying a house? The same investment firms are buying up available stocks and manipulating their prices ahead of you with the same algorithms. Move to Kansas City? The same thing has happened there, proportional to local salaries. And woe be to your offspring if they are ready and willing to go out in the world and set up their own household - rents on starter apartment are 10x what they were 30 years ago.
Driskill: "but also real costs to cutting government benefits over the next few decades. How about less "fiscal fearmongering" and more "watchful waiting?"…:"
How about taking seriously that borrowing to pay for expenditures that do not have NPV>0 is more of a drain on growth than taxing to pay for that kind of expenditure.
"Not catastrophic" is not the same as optimal or even good.
Konczal: Supply-Side Expansion Has Driven the Decline in Inflation
Translation: The greater the value of products for which prices can fall in absolute terms, the less inflation the Fed needs to produce to reduce them in relative terms in order that all markets can clear. ("markets clear" = no recession).
("markets clear" = no recession).
Would that be true for the labor market, especially when millions of formerly-employed people leave the labor force?
Konczal: "In the past two episodes I count as structural-adjustment inflations."
If the Fed does its job right, there will not be any other kind. This time it got inflation almost exactly right. Normally we do not praise surgeons for not killing their patients, but when other do, the one who does not deserves at least a commendation.
The volcano was over-hyped. :)
Refreshed after enjoying all Mike Konczal refreshments.
:-)
The Conference Board Consumer confidence jumped in December; both present situation and expectations were up. December's 'Jobs plentiful minus hard to get' was up 4.5 points over November's. That probably bodes well for the Dec payroll report early next month. The 6-month expectations of both employment and income improved. The 12-month expectations of inflation fell, while those of stock prices increased. Home- automobile-and appliance-buying plans rose. This is not the consumer that's about to roll over and faint!
:-))