U.S. Economy July 2021-December 2023

America Is Aging Into a Housing Crisis for Older Adults
A new Harvard report highlights the housing challenges facing a fast-growing demographic amid the broader US affordability problem.
(Bloomberg) By 2034, the Census Bureau projects that the US will be home to more people over 65 than people under 18. Finding safe and affordable housing for this fast-growing segment of the population is becoming an urgent task, according to a new report from Harvard University’s Joint Center for Housing Studies.
The number of 65-and-over residents who are considered cost-burdened reached record highs in 2021, while federal housing subsidies only reached 36.5% of older households who were eligible. Though the majority of older adults are homeowners, many are still paying off mortgages into old age, and there’s a growing share of renters in their 50s and early 60s. Long-term care expenses, both in-home and at facilities, are out of reach in many cities.

2 December
The Year of the ‘Goldilocks’ Economy
(Bloomberg) While the headlines on US inflation are trending positive, that’s cold comfort for many Americans who need to shell out $119.27 to buy the same goods and services they could afford with $100 four years ago, before the pandemic. Grocery prices have risen 25% since January 2020, as has the cost of electricity. Rents are roughly 20% higher. And while many Americans made solid wage gains in what is still a robust job market, the progress hasn’t kept up with everyday expenses like the cost of gas, let alone a car to put it in. The price surge since 2020 has helped explain why many Americans continue to register dissatisfaction with the economy and why the Federal Reserve is extra keen to finish off inflation and get it back down to its 2% target. New data indicate things are on track for the central bank in the soft landing department with the economy finally simmering down. Consumer spending, inflation and the labor market all cooled in recent weeks, reinforcing forecasts central bankers are done raising interest rates.

26-27 October
Why Americans still don’t like Biden’s economy
By Ramesh Ponnuru
(WaPo) The economy expanded at a nearly 5 percent annual rate during the most recent quarter, the Commerce Department reported Thursday. Economic growth is strong, unemployment is low, and inflation is falling. Yet people are still unhappy about the economy. Gallup’s latest numbers show only 20 percent of Americans consider the economy excellent or good, while 48 percent consider it poor. … Wages haven’t kept up with prices. Average wages are down in real terms — adjusted, that is, for inflation — since President Biden took office. They are roughly 3 percent lower than their peak in April 2020.
When will Americans stop worrying and learn to love the U.S. economy?
By Catherine Rampell
(WaPo) On paper, at least, the U.S. economy looks remarkably good. The recent stunning jobs report has now been followed by a stunning GDP report: U.S. economic output grew at an annual pace of 4.9 percent in the third quarter of this year, the Commerce Department reported Thursday, after adjusting for inflation and the usual seasonal patterns. …
When this year began, a majority of private-sector economists surveyed were predicting an imminent downturn. Heck, even as recently as June, the staff economists at the Federal Reserve were predicting a “mild recession” that would begin sometime in 2023. These economists are not right-wing partisans trying to make President Biden look bad, or naive normies brainwashed by a pessimistic media, whatever Democrats’ fever dreams might be. They’re professional forecasters paid to get the numbers right.
Gross Domestic Product, Third Quarter 2023 (Advance Estimate)
Real gross domestic product (GDP) increased at an annual rate of 4.9 percent in the third quarter of 2023 (table 1), according to the “advance” estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 2.1 percent.
The GDP estimate released today is based on source data that are incomplete or subject to further revision by the source agency (refer to “Source Data for the Advance Estimate” on page 2). The “second” estimate for the third quarter, based on more complete data, will be released on November 29, 2023.

6 October
3 milestones from a stunning jobs report
By Catherine Rampell
The U.S. economy added nearly twice as many jobs in September as economists had forecast, according to the Bureau of Labor Statistics. And that’s before you consider how much job growth was revised upward in July and August. All in all, it was an astonishingly good report.
1. Jobs in bars and restaurants have returned to pre-pandemic levels
2. Government employment is finally back where it was pre-pandemic, but that’s entirely driven by the feds.
3. The share of prime-working-age women who are employed is at a record high

27 July
Could the U.S. still see a recession? A handy primer about the confusing economy
(NPR) Economic forecasters are now more optimistic that the Federal Reserve can get inflation under control and avoid a recession. But we’re not out of the woods yet. The Fed is expected to raise interest rates again this week, and a job market downturn is still possible, which could mean more layoffs. These are some key signs to look out for regarding the health of the U.S. economy.

Heather Cox Richardson June 15, 2023
Yesterday, the Republican Study Committee, a 175-member group of far-right House members, released their 2024 “Blueprint to Save America” budget plan. It calls for slashing the federal budget by raising the age at which retirees can start claiming Social Security benefits from 67 to 69, privatizing Medicare, and enacting dramatic tax cuts that will starve the federal government. …
When the Republican Study Committee calls Biden’s policies—which have led to record employment, a booming economy, and a narrowing gap between rich and poor— “leftist,” they have lost the thread of our history. The system that restored the nation after 1933 and held the nation stable until 1981 is not socialism or radicalism; it is one of the strongest parts of our American tradition.

3 June
Biden signs debt ceiling bill
Biden signed H.R. 3746, the “Fiscal Responsibility Act of 2023,” two days before Monday’s default deadline, on which the U.S. would run out of cash to pay its bills.
(Politico) In the release, Biden thanked House Speaker Kevin McCarthy, Senate Majority Leader Chuck Schumer and Minority Leader Mitch McConnell “for their partnership.”
Shortly after the signing, Biden tweeted: “I just signed into law a bipartisan budget agreement that prevents a first-ever default while reducing the deficit, safeguarding Social Security, Medicare, and Medicaid, and fulfilling our scared obligation to our veterans. Now, we continue the work of building the strongest economy in the world.”
In his first formal Oval Office address Friday evening, Biden declared a “crisis averted.”

Debt ceiling explained: What to know about the showdown in Washington as default looms
WHAT IS THE DEBT CEILING FIGHT ALL ABOUT?
(AP) Once a routine act by Congress, the vote to raise the debt ceiling allows the Treasury Department to continue borrowing money to pay the nation’s already incurred bills.
The debt limit vote in more recent times has been used as a political leverage point, a must-pass bill that can be loaded up with other priorities.
House Republicans, newly empowered in the majority this Congress, are refusing to raise the legal limit unless Biden and the Democrats impose federal spending cuts and restrictions on future spending.
The Republicans say the nation’s debt, now at $31 trillion, is unsustainable. They also want to attach other priorities, including stiffer work requirements on recipients of government cash aid, food stamps and the Medicaid health care program. Democrats oppose those requirements.
Biden had insisted on approving the debt ceiling with no strings attached, saying the U.S. always pays its bills and defaulting on debt is non-negotiable. But he launched negotiations after House Republicans passed their own legislation and made clear they would not pass a clean debt ceiling increase.

26 May
Debt Ceiling Crisis: How a Default Could Unfold
Here’s a look at what markets are expecting and planning for, and how a default might happen.
Debt talks head into weekend with no deal as Yellen adjusts default deadline
Republican negotiators said talks have not lost any urgency, as they now struggle to meet the new default deadline June 5.
(Politico) Also on the table, according to multiple people familiar with the discussions, is a new procedure in place to incentivize Congress to pass all 12 spending bills and a plan to claw back unspent Covid money. Democrats say they have agreed to lift the debt limit through 2024, but a Republican familiar with the talks warned that negotiators still had not reached a deal on how long the debt limit extension would be.
But let’s get one thing clear: No one is winning this game.
(Nightly newsletter) The result, assuming negotiators hammer out an agreement by early next week, will be nothing but a desultory tie, leaving the U.S. economy and everyone’s mental health unnecessarily dented.
The only true answer to what has become a regular game of chicken with the global economy — between politicians who mostly don’t understand the global economy — is to abolish the debt limit in its current form. Kill it. Soak it in gasoline and toss in a match. Consign the debt limit to the hottest corner of hell.
U.S. will default on June 5 if debt limit not raised, Treasury says
President Biden and House Speaker Kevin McCarthy (R-Calif.) report progress on a government spending deal to lift the debt ceiling, but as of Friday no agreement had been reached.

25 May
‘Inching towards a deal’ on the debt ceiling
What are some of the specific sticking points holding this up and how close or far away does a deal look?
(Politico nightly) This is all changing rapidly — but one sticking point is the duration of the deal. Democrats like House Minority Leader Hakeem Jeffries have suggested a freeze in spending should go as long as the hike to the debt ceiling.
Negotiators are striking a more positive tone about a deal than they were earlier in the week, but there’s still a lot of moving parts that have to come together. And the clock is ticking to reach a deal, draft text, and pass it before the so-called X-date on June 1, when the government could run out of cash.
Lawmakers are all set to leave for Memorial Day weekend, but key negotiators are sticking around. The House isn’t scheduled to come back until Tuesday, but lawmakers have been told they’ll have 24 hours notice before returning, and 72 hours to review any legislation. So, next Tuesday is the earliest day on the schedule for them to pass a bill, unless House leaders claw back part of the Memorial Day weekend. Meanwhile, the Senate is also out until Tuesday, and President Joe Biden is scheduled to leave this weekend for Camp David and Delaware.
The ‘debt ceiling’ is made up. So why is it making our heads hurt?
A daring, dazed trip into the ‘hostage’ situation on Capitol Hill
By Dan Zak, Jesús Rodríguez, Ben Terris and Kara Voght
Congress is not run by accountants, alas. But it must account for the debt ceiling to avoid a catastrophic default in a matter of days. Members have been fighting, grandstanding, negotiating through the media, negotiating at the White House, reverting to stilted brinkmanship and abusing metaphors in search of the simplest way to describe the bureaucratic, extortive, purely voluntary, perfectly insane procedural paroxysm gripping Washington right now.

24 May
Ian Bremmer: How’s the US economy doing right now?
By some measures, Americans think economic conditions are about as bad as they were during the heights of the Great Recession – when millions of workers had just been thrown out of work, unemployment was in the double digits, and households had lost more than $10 trillion worth of wealth.
This disconnect between reality and perception is quite striking, but it’s not mysterious. To understand it, there are two things you need to know.
First, inflation is much more salient than unemployment. While unemployment imposes severe costs on a small group of people, inflation affects everyone. Bad news also gets more coverage – and sticks more with people – than good news. The corollary is that as far as perceptions go, a strong labor market can’t possibly cancel out the rising cost of living. That’s why only one in five Americans say their financial situation has improved since last year. To the rest, hearing that jobs are plentiful is little consolation when they’re already employed but can’t afford groceries.
Second, partisanship plays a much larger role in shaping public opinion than it did in the past. It used to be that feelings about the economy were determined by the actual state of the economy. But this relationship broke sometime in the last two decades, no doubt thanks to the rise in polarization and the echo chambers created both by social media and by our increasingly politicized news media.
These days, Americans’ feelings about the economy are determined almost exclusively by the president’s politics, independent of the actual state of the economy. The partisan gap in economic perceptions under President Joe Biden and former President Trump has been more than double that under former presidents Barack Obama and George W. Bush. That means virtually half of the country is always bound to be sour on the economy, no matter how good it may be.
Rightly or wrongly, most Americans are feeling down about the economy, and no amount of explainers are about to change that. While for now consumers are still spending like it’s the roaring twenties, there’s always the risk that we’ll eventually talk ourselves into a recession. Perception may not be reality, but when it comes to politics and economics, it’s pretty damn close.

23 May
Debt ceiling brinksmanship has clear negative effects on taxpayers
Wendy Edelberg, Director – The Hamilton Project, and Senior Fellow – Economic Studies; and Noadia Steinmetz-Silber, Senior Research Assistant – Economic Studies, The Hamilton Project
(Brookings) Even if policymakers raise the debt ceiling in time to prevent its constraining payments, the economic effects are unambiguously negative. Watchers of scheduled U.S. federal payments and projected tax revenues worry that if the debt ceiling is not raised, Treasury could run short of resources to pay its obligations as early as June 1, the so-called “X-date.”
Should the debt ceiling bind, the negative economic effects would quickly mount and risk triggering a deep recession. As Edelberg and Louise Sheiner discussed in a recent piece:
There is enormous uncertainty regarding the damage the U.S. economy would incur, as it depends on how long the situation lasts, how it is managed, and the extent to which investors alter their views about the safety of Treasury securities. Would the stock market tumble precipitously the first day that a non-interest payment is delayed? Would the Treasury securities market, the world’s most important, function smoothly? Would there be a run on money market funds that hold short-term Treasury securities? What actions would the Federal Reserve take to stabilize financial markets and the economy more broadly?

24 April
How Worried Should We Be if the Debt Ceiling Isn’t Lifted?
By: Wendy Edelberg, Louise Sheiner
(Hamilton Project) Once again, the debt ceiling is in the news and is a cause for concern. If the debt ceiling binds, and the US Treasury does not have the ability to pay its obligations, the negative economic effects would quickly mount and risk triggering a deep recession.
The debt limit caps the total amount of allowable outstanding US federal debt. The US hit that limit—$31.4 trillion—on January 19, 2023, but the Department of the Treasury has been undertaking a set of “extraordinary measures” so that the debt limit does not yet bind. Treasury estimates that those measures will be sufficient through at least early June. Sometime after that, unless Congress raises or suspends the debt limit, the federal government will lack the cash to pay all its obligations. Those obligations are the result of laws previously enacted by Congress. As our colleagues Len Burman and Bill Gale wrote, “Raising the debt limit is not about new spending; it is about paying for previous choices policymakers legislated.”

13 April
The Economist: The world’s biggest economy is leaving its peers in the dust
In most of our editions we focus on the astonishing performance of America’s economy. Nearly four-fifths of Americans tell pollsters that their children will be worse off than they are. In fact America has sustained its decades-long record as the world’s richest, most productive and most innovative big economy. Indeed, it is leaving its peers ever further in the dust. Only those in über-rich petrostates and financial hubs enjoy a higher income per person. American firms own more than a fifth of patents registered abroad, more than China and Germany put together.
Americans worry about inequality—and it is true that the middle-class has seen fewer gains than the rich and the poor, who have benefited from a big increase in the size of the safety-net. It is also true that America’s politics are toxic and that life expectancy is being dragged down by shootings and drug overdoses. China and climate change remain real threats. But talking down the American economy is not only wrong in fact, it also breeds pessimistic policies like protectionism, lower immigration and government subsidies that could spoil the secret sauce which has made America so successful.

Heather Cox Richardson March 12, 2023
On Friday, Silicon Valley Bank (SVB) failed in the largest bank failure since 2008. At the end of December 2022, SVB appears to have had about $209 billion in total assets and about $175 billion in deposits. This made SVB the sixteenth largest bank in the U.S., big in its sector but small compared with the more than $3 trillion JPMorgan Chase. …
At 6:15 this evening, Secretary of the Treasury Janet L. Yellen, Federal Reserve Board Chair Jerome H. Powell, and Federal Deposit Insurance Corporation (FDIC) Chairman Martin J. Gruenberg announced that Secretary Yellen has signed off on measures to enable the FDIC to fully protect everyone who had money in Silicon Valley Bank, Santa Clara, California, and Signature Bank, New York.
The failure of SVB created shock waves for three reasons. First, SVB was the major bank for technology start-ups, so it involved much of a single sector of the economy. Second, only about $8 billion of the $173 billion worth of deposits in SVB were less than the $250,000 that the FDIC insures, meaning that the companies who had made those deposits might not get their money back quickly and thus might not be able to make payrolls, sparking a larger crisis. Third, there was concern that the problems that plagued SVB might cause other banks to fail, as well.
The Federal Deposit Insurance Corporation (FDIC) took control of the bank on Friday. On Sunday, regulators also shut down Signature Bank, based in New York, which was a major bank for the cryptocurrency industry. Another crypto-friendly bank, Silvergate, failed last week.
Over the weekend, the crisis at SVB became a larger argument over the role of government in the protection of the economy. Tech leaders took to social media to insist that the government must cover all the deposits in the failed bank, not just the ones covered under FDIC. They warned that the companies whose deposits were uninsured would fail, taking down the rest of the economy with them.
Others noted that the very men who were arguing the government should protect all the depositors’ money, not just that protected under the FDIC, have been vocal in opposing both government regulation of their industry and government relief for student loan debt, suggesting that they hate government action…except for themselves.
It appears that Yellen, Powell, and Gruenberg, in consultation with the president (as required), concluded that the collapse of SVB and Signature Bank was a systemic threat to the nation’s whole financial system, or perhaps they concluded that the panic over that collapse—which is a different thing than the collapse itself—was a threat to the nation’s financial system. They apparently decided to backstop the banks to prevent more damage. But they are eager to remind people that they are not using taxpayer money to shore up a poorly managed bank.

9 March
Biden calls for trillions in tax hikes and new domestic spending
The White House plan would cut the deficit while also reviving sweeping attempts to transform the economy
(WaPo) President Biden on Thursday unveiled a 2024 budget proposal that revived his calls for massive new social spending and tax hikes on the rich, foreshadowing his presidential campaign and challenging Republicans ahead of a looming fiscal showdown.
The president’s budget calls for paring back the deficit over the next decade while also spending more than $2 trillion on dozens of new domestic policy initiatives, paid for by raising more than $4.5 trillion in new revenue primarily through hefty tax hikes on high earners and large corporations. The White House’s spending blueprint envisions a much more expansive role for the federal government overall, aiming for close to $10 trillion in annual spending by 2033 — up from roughly $6.3 trillion currently, and about $6.9 trillion in the next fiscal year — funded through both the tax hikes and by reining in federal spending on prescription drugs.
The blueprint, which Biden will tout during a speech on Thursday in Philadelphia, will not pass through a Republican-controlled House, as GOP lawmakers already declared it a non-starter. The 182-page document also reveals the numerous challenges the administration faces in crafting federal economic policy that aligns with its political objectives — projecting an increase in the deficit for next year, relatively sluggish economic growth and a federal debt that even the administration says will eclipse $40 trillion a decade from now.
Biden lays budget bait for Republicans
(Politico) No one in the White House seriously believes that Congress will adopt it in its current form. In private, administration officials readily admit that they know it’s not going anywhere.
So why does it matter? Beyond the obvious implications for governing, we’re told it’ll constitute the crux of Biden’s pitch as he’s expected to launch his reelection campaign in the near future. (We’re sure it’s purely coincidental that he’ll be unveiling the budget in the critical swing state of Pennsylvania.)
It’s a messaging exercise. And as such, the White House sees no downside whatsoever to throwing out things that will never pass the Republican-controlled House. The fight is the point.

2022

12 December
A pivotal week in the life of the U.S. economy
By BEN WHITE
Best case for this week is solid progress on core inflation (stripping out food and energy, that is) and a breezy Powell suggesting that while not complete, the Fed sees a clear path to stopping all the hikes. The more likely scenario is a decent but not great CPI report and a stressed out Powell, increasingly unsure that he can succeed in taming inflation without smashing the whole economy.
(Politico Nightly) [Federal Reserve Chair Jerome] Powell’s real problem is with the labor market. Gas prices have declined. Goods inflation has eased a bit as consumers transition more to services like dining out and travel from ordering stuff to their homes. Supply chain problems have eased off a lot. New and used car price increases are dropping.
But one thing that has not relented much in the face of all the hiking is the labor market, which remains very tight, with far more demand than supply. That continues to drive up wages in ways the Fed doesn’t think are sustainable and that goose overall inflation as employers pass higher employment costs on to customers.

25 September
Global investors brace for more chaos
By Davide Barbuscia and Dhara Ranasinghe
(Reuters) – Global investors are preparing for more market mayhem after a monumental week that whipsawed asset prices around the world, as central banks and governments ramped up their fight against inflation.
Signs of extraordinary times were everywhere. The Federal Reserve delivered its third straight seventy-five basis point rate hike while Japan intervened to shore up the yen for the first time since 1998. The British pound slid to a fresh 37-year trough against the dollar after the country’s new finance minister unleashed historic tax cuts and huge increases in borrowing.
“It’s hard to know what will break where, and when,” said Mike Kelly, head of multi-asset at PineBridge Investments (US). “Before, the thinking had been that a recession would be short and shallow. Now we’re throwing that away and thinking about the unintended consequences of much tighter monetary policy.”
Stocks plunged everywhere. The Dow Jones Industrial Average nearly joined the S&P 500 and Nasdaq in a bear market while bonds tumbled to their lowest level in years as investors recalibrated their portfolios to a world of persistent inflation and rising interest rates.
Towering above it all was the U.S. dollar, which has rocketed to its highest level in 20 years against a basket of currencies, lifted in part by investors seeking shelter from the wild swings in markets.

24 September
Fed unsure of economy’s direction as Wall Street meltdown worsens
After the Fed misjudged inflation in 2021, Federal Reserve Chair Jerome H. Powell is talking honestly about his uncertainty of whether the U.S. can avoid a recession.
Federal Reserve Chair Jerome H. Powell acknowledged this week that there are a few things he does not know about the U.S. economy.
He doesn’t know if it is doomed to fall into recession. He doesn’t know how long high inflation will persist. And he doesn’t know if healthier supply chains will be much help.
“It’s very hard to say with precise certainty the way this is going to unfold,” Powell told reporters this week. “No one knows whether this process will lead to a recession or, if so, how significant that recession would be.”
Public confessions of doubt are rare in official Washington. But they have become commonplace for Powell, 69, whose candor reflects the uncertainties shrouding the global economy as well as a revolution in Fed communications since the days when then-Chairman Alan Greenspan cultivated an image of singular economic mastery.
Fed’s interest rate hikes may mark start of tough new economic climate – Decades of falling rates give way to higher borrowing costs and new math for investments (19 June)

13-18 September
Jennifer Rubin: Distinguished pol of the week: He helped fend off a crippling strike
As a former labor lawyer, I can attest that when heading into the final hours of a labor negotiation, after months if not years of haggling, both parties can be frustrated, tired and angry. The intervention of a third-party mediator can therefore be critical to avoid a work stoppage.
In the case of the averted railway workers strike this week, that role was played by Labor Secretary Marty Walsh.
By all accounts, Walsh and his deputy Julie Su made a huge difference, helping to facilitate the final 20 hours of talks
‘Could have gone either way’: Railroad union deal barely survived
(Politico) Steering clear of disaster required some 20 straight hours of talks beginning Wednesday that taxed Labor Department coffee supplies, kept West Wing office lights burning through the early hours and left everyone involved bleary-eyed and largely sleepless.
The agreement, still subject to union members’ approval, seemed all but dead late into the night as talks led by Labor Secretary Marty Walsh dragged on with all sides in the years-long dispute frustrated and exhausted.
But the prospect of dormant freight trains leaving fall crops to rot in the fields, livestock to die of starvation and grocery shelves to go empty hung over the West Wing and spurred heavy pressure from Biden and the White House to strike a deal.
Freight rail strike threatens supply chains, prompting White House planning
A federally mandated “cooling-off” period ends on Friday, which opens the possibility of a nationwide strike or lockout.
(WaPo) White House aides are looking at how to ensure essential products carried by rail — such as food, energy, and key health products — could still reach their final destination even in the event of a potential strike. Senior officials have looked at how highways, ports and waterways can be used to offset any damage caused, while also talking to top officials in the shipping, freight and logistics industries.

13 September
How Is the Economy Doing?
By Ben Casselman and Lauren Leatherby
(NYT) Even in the best of times, it can be hard to get a handle on what’s happening in an economy with 150 million workers and $20 trillion worth of annual output. And these are far from the best of times. The pandemic and its ripple effects are continuing to disrupt global supply chains and keeping millions of Americans out of work. The war in Ukraine has pushed up gas and food prices, and added a new source of uncertainty. The Federal Reserve is trying to beat back the fastest inflation in decades — and threatening to cause a recession in the process.
By one common definition, the United States is already in a recession, because gross domestic product has declined for two consecutive quarters. Most economists consider that definition too simplistic, and prefer to look at a broader array of indicators across a variety of categories.
10 September
Americans are finally feeling better about the economy
Gas prices are falling, and there are signs households are learning to deal with inflation
(WaPo) Consumer sentiment, which hit rock bottom in June, has begun inching up in recent weeks. Gas prices are down. Decades-high inflation appears to be easing. And at the same time, Americans are making small changes — buying meat in bulk, for example, or shifting more of their shopping to discount chains — suggesting that many families are learning to deal with higher prices.

28 July
U.S. economy shrinks again in second quarter, reviving recession fears
The latest GDP reading comes at a time of mounting worries about the economy’s resilience
The U.S. economy has shrunk for a second straight quarter, at an annual rate of 0.9 percent, raising concerns that the country may be heading into a recession and compounding the Biden administration’s political challenges as it grapples with decades-high inflation.
In many respects, the economy is in uncharted territory. The only time there have been six months of contraction without a recession appears to have been in 1947, according to Tara Sinclair, an economics professor at George Washington University.

27-29 July
The Manchin pressure campaign: CEOs, labor bosses and Bill Gates
(Politico) With hundreds of billions of dollars of incentives for manufacturing, electric vehicles, nuclear power and carbon capturing technology hanging in the balance, executives from some of the nation’s biggest companies and labor unions made their case to the Democratic West Virginia senator: The next generation of clean tech needed Washington’s backing to take off.
Clean energy manufacturing companies with plans to set up shop in Manchin’s state helped orchestrate the 13-day effort to change his mind, more than 20 people involved in the effort told POLITICO — eventually helping to get his backing for the $369 billion in incentives in the newly dubbed Inflation Reduction Act, H.R. 5376 (117). That push — which two of the people said included a call from Bill Gates, whose venture capital firm has backed a West Virginia-based battery start-up — was taking place alongside a campaign by other senators along with economist and inflation hawk Larry Summers to convince Manchin of the merits of the bill.
Senate passes bipartisan bill to subsidize U.S.-made semiconductor chips in a bid to strengthen the United States’ competitiveness and self-reliance in what is seen as a keystone industry for economic and national security.
Senate passes bill to reduce reliance on China for semiconductors
(NPR) The CHIPS bill, short for Creating Helpful Incentives to Produce Semiconductors for America Act, would provide $54 billion in grants for semiconductor manufacturing and research, tens of billions to support regional technology hubs and a tax credit covering 25% of investments in semiconductor manufacturing through 2026. … The legislation would also authorize roughly $100 billion in spending over five years on scientific research, including more than $80 billion for the National Science Foundation.  … The Biden administration says enhancing the chip industry at home will also help ease supply chain disruptions.

18 July
The Everything-Is-Weird Economy
If gas prices are plummeting, why is inflation rising? If jobs are growing, why is GDP falling? If everybody’s on vacation, why are consumers miserable?
By Derek Thompson
(The Atlantic) Months from now, we may look back on the summer of 2022 and realize that this apparent weirdness was pretty self-explanatory, after all. We might look back and say:
America’s labor recovery was impressively swift because it coincided with an unsustainable boom in demand. Along with supply-chain challenges, this creation a classic surge in domestic inflation, with too much money chasing finite goods and services. The Federal Reserve responded by turning up interest rates to crush demand. And this predictably caused a downturn in spending and investment. In the handoff from boomflation to recession, gas prices fell before inflation, growth fell before employment, and sentiment plunged before spending. In the end, it all went in the same direction: down.
What I’m describing here is a recession. And I don’t like how plausible the story sounds. If this is the most likely alternative to the everything-is-weird economy, then I say: Keep the American economy weird.

25 June
Greedflation: Is corporate price gouging fuelling inflation? Experts weigh in
By Paul Wiseman
(AP) … most economists say corporate price gouging is, at most, one of many causes of runaway inflation — and not the primary one.
They include: Robust spending by consumers. Supply disruptions at factories, ports and freight yards. Worker shortages. President Joe Biden’s enormous pandemic aid program. COVID 19-caused shutdowns in China. Russia’s invasion of Ukraine. And, not least, a Federal Reserve that kept interest rates ultra-low longer than experts say it should have.
The blame game is, if anything, intensifying after the U.S. government reported that inflation hit 8.6 per cent in May from a year earlier, the biggest price spike since 1981.

22-25 January
Crypto collapse erases more than $1 trillion in wealth, forcing a reckoning for everyday investors
Some are rethinking their plans; others say they are invested for the long term
The slide has accelerated over the past week as investors have fled riskier bets for safer harbors. The “crypto crash” has put pressure on Washington regulators to impose stricter rules on the industry — and raised fresh questions about the dangers of cryptocurrency for the average investor.
Bitcoin price falls sharply amid Wall Street sell-off, with value cut in half since November
Investors are fleeing riskier assets from tech stocks to cryptocurrencies as the Federal Reserve weighs whether to launch a U.S. digital currency
(WaPo) The price of bitcoin has fallen from its November highs of nearly $70,000 to now around $35,000. On Saturday, bitcoin, the world’s largest cryptocurrency by market value, had fallen around 9 percent in just 24 hours. Since the start of the year, it has fallen around 23 percent. Meanwhile, Ethereum, the second largest cryptocurrency, fared even worse, dropping around 15 percent over 24 hours and roughly 35 percent since the new year.
The sell-off accelerated a two-month slide in the global cryptocurrency market that has vaporized $1.4 trillion in value: After reaching a high of roughly $3 trillion in early November, the total value of digital assets sat just above $1.6 trillion early Saturday afternoon, according to CoinMarketCap.

21 January
Wonking Out: Honey, I Shrank the Economy’s Capacity
Paul Krugman
Last spring the debate was focused on the American Rescue Plan, the Biden administration’s large spending package. A number of economists, including Larry Summers, Olivier Blanchard, and Jason Furman, warned that this package would overstimulate the economy — that output and employment would soar to levels that would create a lot of inflationary pressure.
Those of us on the other side argued that the risks of excess spending were much less than they warned — that large parts of the Biden package, like aid to state and local governments, would end up being disbursed gradually over time and therefore not have that much of an inflationary impact. To use the jargon,  I argued that the A.R.P. would have a low “multiplier.”
… We’ve seen a strong recovery in employment, but we’re still significantly below prepandemic levels.
The point is that if you had told me a year ago that this is what current output and employment numbers would be, I wouldn’t have predicted soaring inflation. To put it another way, my expectations of a relatively muted effect of government outlays on demand were more or less vindicated. But of course my expectations of moderate inflation weren’t. So what happened?

3 January
The 2022 Economy Looks Strong, but Beware the Known Unknowns
COVID and policy changes could radically affect growth, inflation, and the midterm elections.
By John Cassidy
Most professional economic prognosticators think that 2022 will be another strong year of recovery from the virus-induced slump of 2020. The Conference Board is predicting growth of 3.5 per cent; Goldman Sachs is predicting 3.8 per cent; Bank of America says four per cent. If the economy does expand by somewhere between 3.5 and four per cent, that would represent a slowdown from 2021, but it would also be a very strong economy. In the decade before the pandemic, the annual rate of growth never reached three per cent.
There is also positive news about the global supply-chain problems that have contributed greatly to surging inflation. Concerns about holiday shoppers facing empty shelves turned out to be largely misplaced. In Europe, factories reported that supply logjams eased for the second month in a row. “While shortages remained significant, the end of the year brought with it some signs that cost pressures have eased,” Siân Jones, a senior economist at the data firm IHS Markit, told the Wall Street Journal. Based on these trends, it is far from unthinkable that, by the second half of this year, with the midterm elections approaching, inflation could decline in an environment of solid G.D.P. growth and low unemployment.
… Even if the U.S. economy does get through the Omicron wave relatively unscathed, with few or no lockdowns, the new variant could affect production in the Chinese economy, which supplies many components and finished goods to the U.S. China just recorded the largest number of weekly cases since suppressing the initial wave of the pandemic. The spread of Omicron represents the biggest challenge yet to Beijing’s “zero COVID” policy. A decision to lock down large parts of China’s economy could exacerbate problems in the supply chain. In a globalized economy, no country—even one as big and powerful as the U.S.—exists in isolation.

2021

14 December
Labor market exits and entrances are elevated: Who is coming back?
Lauren Bauer and Wendy Edelberg
(Brookings) In spring 2020, millions of Americans lost or left their jobs. While many continued to search for work, ready to take a job, others left the labor force entirely. Even as the unemployment rate has fallen back to historically low levels, the labor force participation rate (LFPR, which measures the share of the population that is employed or is unemployed and looking for work) remains depressed. This report takes a deeper dive into who is returning to work—and who is not—to better understand how the balance of the recovery might unfold.
… Although people out of the labor force continue to enter each month at elevated rates, two findings suggest particular risk for the labor market outlook going forward: (1) the exit rate out of the labor market is generally more elevated among those without a four-year postsecondary degree and (2) people who are unemployed continue to leave the labor force at surprisingly high rates given the strength of labor demand.

26 November
The almost-normal holiday returns
(Politico) — Inflation continues to dominate voters’ perceptions of the economy , and things are likely to stay that way through the holiday shopping season. Top Democratic pollsters and others in the party are urging the White House to get more vocal and serious about tackling inflation, perhaps even pinning the blame on big companies raking in cash, WaPo’s Annie Linskey and Ashley Parker report from Nantucket. Some legislators want Biden to talk more about rising prices and what he’s doing to combat them, while others think he should instead emphasize other parts of his economic message.
— Supply-chain woes are front and center in pretty much every Black Friday story. And with consumers concerned about whether their online orders will be fulfilled before Christmas, it could be a boon for brick-and-mortar businesses. (“Shoppers can leave with goods in hand, versus waiting on promised dates from shippers,” a Deloitte exec told CNN.)

19 November
House passes roughly $2 trillion spending package that would expand social benefits and fight climate change
Republicans delayed the vote, but Democrats pushed ahead on one of Biden’s key priorities. The battle now moves to the Senate.
(WaPo) The measure amounts to a dramatic re-envisioning of the role of government in Americans’ daily lives. It sets aside in some cases historic sums to aid workers, families and businesses, seeking to rewire the very fabric of an economy still recovering from the financial devastation wrought by the coronavirus pandemic.
The successful 220-to-213 House vote on the Build Back Better Act, bearing the name of the president’s 2020 campaign slogan, marks the second legislative milestone for Democrats this month. It comes about two weeks after they joined with Republicans to finalize a separate, sweeping bill to improve the nation’s roads, bridges, pipes, ports and Internet connections, delivering long-sought infrastructure investments that Biden signed into law Monday.

Heather Cox Richardson: November 18, 2021
…the economic news continued to be good. A report from the Organisation for Economic Co-operation and Development on Thursday showed that the United States is the only G7 country to surpass its pre-pandemic economic growth. That growth has been so strong it has buoyed other countries.
Meanwhile, the administration’s work with ports and supply chains to handle the increase in demand for goods appears to be having an effect. Imports through the ports of Los Angeles and Long Beach are up 16% from 2018, and in the first two weeks of November, those two ports cleared about a third of the containers sitting on their docks.
Then the Congressional Budget Office (CBO) released its score for the Democrats’ $1.85 trillion Build Back Better Act. The CBO is a nonpartisan agency within the legislative branch that provides budget and economic information to Congress. The CBO’s estimate of the costs of the Build Back Better Act will affect who will vote for it.
The CBO’s projection was good news for the Democrats; it was in line with what the Democrats had said the bill would cost. The CBO estimates that the bill will increase the deficit by $367 billion over ten years. But the CBO also estimates that the government will raise about $207 billion over those same ten years by enforcing tax rules on those currently cheating on them. These numbers were good in themselves—in comparison, the CBO said the 2017 Republican tax cuts would cost $1.4 trillion over ten years—but they might get even better. Many economists, including Larry Summers, who has been critical of the Biden administration, think that the CBO estimates badly underplay the benefits of the bill.
The CBO score also predicted that the savings from prescription drug reforms in the bill would come in $50 billion higher than the House had predicted.

9 November
Paul Krugman: The making of a feel-bad boom
By the usual measures, the U.S. economy has been booming this year. Employment has risen by more than five million since January; a record number of Americans say this is a good time to find a quality job, a sentiment reflected in the willingness of an unprecedented number of workers to quit (yes, high quit rates are a good sign). One answer is that Americans are upset about inflation and disrupted supply chains. And that’s surely true. But I’d suggest that it’s only part of the story — that to an important extent, when you ask people about the state of the economy, their replies don’t necessarily reflect their actual experience. Instead, they respond based on what they imagine is happening to other people, a perception that can be shaped by news reports and their own political leanings.

6 November
Congress approves $1.2 trillion infrastructure bill, sending measure to Biden for enactment
The infrastructure proposal, nearly half of which constitutes new spending, marks one of the most significant investments in the country’s infrastructure since Congress responded to the Great Recession. It seeds new funding in the hopes of delivering urgently needed fixes to the country’s outdated inner-workings while setting the U.S. on track to tackle more intractable future challenges, including the fast-worsening climate crisis.
(WaPo) House lawmakers late Friday adopted a roughly $1.2 trillion measure to improve the country’s roads, bridges, pipes, ports and Internet connections, overcoming their own internecine divides to secure a long-sought burst in federal investment and deliver President Biden a major legislative win.
The bipartisan 228-to-206 vote marked the final milestone for the first of two pieces in the president’s sprawling economic agenda. The outcome sends to Biden’s desk an initiative that promises to deliver its benefits to all 50 states, a manifestation of his 2020 campaign pledge to rejuvenate the economy in the aftermath of the coronavirus pandemic and “build back better.”
The path to passage proved littered with political conflict, pushing to the limits a fractious party with still-widening ideological fissures. Democrats initially hoped to approve the infrastructure bill on Friday along with a separate, roughly $2 trillion proposal to overhaul the nation’s health care, education, immigration, climate and tax laws. Doing so would have advanced two spending initiatives that have been stalled on Capitol Hill for months.
[FACT SHEET: The Bipartisan Infrastructure Investment and Jobs Act Advances President Biden’s Climate Agenda  (August 05, 2021)]

26 October
Democrats Hammer Out Novel Plan to Tax Billionaires and Corporate Giants
(NYT) New proposals would fund social and climate programs by tapping billionaires’ unrealized gains and by ensuring that the biggest companies cannot avoid income taxes altogether.
(Reuters) U.S. billionaires would pay tax on unrealized gains from their assets to help finance President Joe Biden’s emerging social-policy and climate-change legislation, according to a proposal unveiled by the top Senate Democrat for tax policy.
The so-called billionaires tax, announced by Senate Finance Committee Chairman Ron Wyden, is part of a two-pronged legislative strategy that also includes a proposed 15% corporate minimum tax on the most profitable U.S. corporations.

13 October
Biden Announces Measures at Major Ports to Battle Supply Chain Woes
The Port of Los Angeles will join the Port of Long Beach in operating 24/7 as the administration struggles to address a problem that is boosting inflation.
(NYT) President Biden announced Wednesday that the Port of Los Angeles will operate around the clock and major companies including Walmart, UPS and FedEx would expand their working hours as his administration struggles to relieve growing backlogs in the global supply chains that deliver critical goods to the United States.
Product shortages have frustrated American consumers and businesses and contributed to inflation, which threatens to hurt the president politically. And the problems appear poised to worsen, enduring into late next year or beyond and disrupting shipments of necessities like medications as well as holiday purchases.
He praised the role of the International Longshore and Warehouse Union in stepping up to work extended hours and also urged the passage of an infrastructure bill that would make significant investments in ports, roads and factories for the longer term.

11 October
Is the U.S. Already in Recession?
(Bloomberg New Economy newsletter) Given America’s pandemic recession is only judged to have ended in April 2020, discussion of a double dip so soon seems premature.
Yet, David Blanchflower of Dartmouth College and Alex Bryson of University College London have kicked off such a debate.
In a new research paper released last week, they used history to wonder if a recent decline in consumer expectations suggests the world’s biggest economy is already in recession again.
Every slump since the 1980s has been foreshadowed 18 months ahead of time by drops of at least 10 points in gauges of consumer expectations from the Conference Board and University of Michigan, according to the authors.

28 September
The Biden administration could sidestep McConnell’s refusal to pay America’s bills by minting a $1 trillion platinum coin
The Treasury Department technically has the ability to issue platinum coins of any denomination.
In theory, Janet Yellen could mint a $1 trillion platinum coin and deposit it at the Federal Reserve.

Heather Cox Richardson September 27, 2021
Today, the Senate considered a bill to fund the government until December and to raise the debt ceiling. The Republicans joined together to filibuster it. … The Republicans are taking the country hostage to undercut the Democrats. If Congress does not fund the government by Thursday, the government will shut down. And if the country goes into default sometime in mid-October, the results will be catastrophic
The new fiscal year starts on October 1, and if the government is not funded, it will have to shut down, ending all federal activities that are not considered imperative. This year, such activities would include a wide range of programs enacted to combat the economic crisis sparked by the coronavirus pandemic.
Not funding the government means it will have to shut down; not paying our debts means catastrophe. Both of these measures will hobble the economic recovery underway; refusing to manage the debt ceiling will collapse the economy altogether and crash our international standing just as President Biden is trying to reassert the strength of democracy on the world stage.

23 September
Why Trouble at a Chinese Real-Estate Company Led to a U.S. Stock Market Plunge
Wall Street seems to be wrapping its head around just how fast things are changing in Xi’s China. Evergrande’s woes are emblematic of those changes.
(New York) While Wall Street scrambled to understand how an Evergrande bankruptcy would affect the global financial system, another narrative started to form: that Evergrande’s troubles are best read as yet another sign that Xi is dead serious about cracking down on the go-go culture of the last two decades, zeroing in on video games, tech, and the elite — including billionaire real-estate developers. This line of thinking also tends to lead to the seismic conclusion that all the U.S. companies pinning their long-term growth strategies on doing more business in China may soon have to do a major rethink.

18 September
Geriatric millennials have the most power in the workforce right now
Older millennials and younger Gen Xers are driving America’s Great Resignation, per HBR.
In the middle of this cohort are geriatric millennials, known for acting as a generational bridge.
With their unique skillset and greater freedom to quit, they have the upper hand in the workforce.
(Business Insider) By now, you’ve probably heard about the Great Resignation.
Coined by psychologist Anthony Klotz, the trend involves millions of Americans dropping out of the workforce throughout the economy as it reopened more and more. Over 3.6 million people quit in April, May, June, and July, according to the Bureau of Labor Statistics.
According to a recent analysis by the Harvard Business Review that looked at 9 million employee records from more than 4,000 companies, mid-career employees are driving the quits. Resignation rates are highest among 30- to 45-year-old employees, increasing on average by more than 20% over the past year.

8 September
America’s new retirement age is 62 — or younger. The ‘Great Resignation’ is giving boomers their golden years back.
Nearly half of Americans in a New York Fed survey said they expected to retire before turning 62.
Retiring earlier lets Americans use their “golden decade” for better financial planning.
But the economy depends on older workers, and a move to retiring early could upend the labor market.

4 September
Why America has 8.4 million unemployed when there are 10 million job openings
The economy is undergoing massive changes. There’s a big mismatch at the moment between the jobs available and what workers want.
(WaPo) [T]he nation remains in the midst of a deadly pandemic with covid-19 hospitalizations back at their highest rates since January. The surge is weighing on the labor market again, with a mere 235,000 jobs added in August. There are still 5 million fewer jobs compared to before the pandemic, reflecting ongoing problems, including child care as some schools and day cares shut down again from outbreaks.
This weekend, the employment crisis will hit an inflection point as many of the unemployed lose $300 in federal weekly benefits and millions of gig workers and self-employed lose unemployment aid entirely. Some anticipate a surge in job seekers, though in 22 states that already phased out those benefits, workers didn’t flood back to jobs.

30 August
Nouriel Roubini: The Stagflation Threat Is Real
(Project Syndicate) I have been warning for several months that the current mix of persistently loose monetary, credit, and fiscal policies will excessively stimulate aggregate demand and lead to inflationary overheating. Compounding the problem, medium-term negative supply shocks will reduce potential growth and increase production costs. Combined, these demand and supply dynamics could lead to 1970s-style stagflation (rising inflation amid a recession) and eventually even to a severe debt crisis.

Heather Cox Richardson August 10, 2021
Last Friday, the Bureau of Labor Statistics in the Department of Labor released the jobs report for August 2021. It was stronger than economists had predicted, and even stronger than the administration had hoped.
In July, employers added 943,000 jobs, and unemployment fell to 5.4%. Average hourly wages increased, as well. They are 4% higher than they were a year ago.
Harvard Professor Jason Furman, former chair of President Barack Obama’s Council of Economic Advisors, tweeted: “I have yet to find a blemish in this jobs report. I’ve never before seen such a wonderful set of economic data.” He noted the report showed “Job gains in most sectors… Big decline in unemployment rate, even bigger for Black & Hispanic/Latino… Red[uctio]n in long-term unemp[loyment]… Solid (nominal) wage gains.”
“Still a long way to go,” he wrote. “[W]e’re about 7.5 million jobs short of where we should have been right now absent the pandemic. But we’ve made a lot of progress.”
The jobs report is an important political marker because it appears to validate the Democrats’ approach to the economy, the system the president calls the “Biden Plan.” That plan started in January, as soon as Biden took office, using the federal government to combat the coronavirus pandemic as aggressively as the administration could and, at the same time, using federal support to restart the economy.

6 August
New York Intelligencer Slack Chat: Delta Be Damned, the U.S. Economy Keeps Chugging Along
Benjamin Hart spoke with Intelligencer senior writer Eric Levitz about what appears to be a piece of unambiguously good news, the state of inflation and labor shortages, and to what extent the pandemic still threatens the economy.
Ben: Friday’s jobs report was encouraging in almost every sense of the word. There were strong hiring numbers in most industries, for a total of 943,000 jobs added in July. The unemployment rate ticked down significantly, to 5.4 percent. (Still more than a point higher than pre-pandemic.) It’s never smart to make too much out of one month’s data, but this comes amid generally strong economic indicators elsewhere. What is your first-blush impression of this report and how it fits in with the overall economic picture in America?
Eric: My first impression is that the recovery is much stronger than we realized (or at least, was much stronger before Delta really took off.) The report didn’t just show that the economy added more jobs in July than had been expected; it also revised June’s number upward. As the Times’ Neil Irwin notes, yesterday, the consensus estimate of the average monthly job gain across May, June, and July was 567,000. That number is now 832,000.
What’s more, the drop in the unemployment rate is especially impressive because the pool of job-seekers also expanded. The headline unemployment rate tells us the percentage of Americans who are actively looking for work but can’t find any.

2 August
$1 trillion infrastructure bill heads for Senate debate
(AP) — Senate Majority Leader Chuck Schumer sought to speed up consideration of a nearly $1 trillion bipartisan infrastructure package Monday, promising that Democrats would work with Republicans to put together amendments.
Formally the Infrastructure Investment and Jobs Act, the proposal clocked in at some 2,700 pages late Sunday after a hurry-up-and-wait rare weekend session.

29 July
US economy returns to pre-pandemic level but misses growth forecasts
(The Guardian) Gross domestic product (GDP) increased at a 6.5% annualised rate in the three months to the end of June, according to figures from the US Commerce Department on Thursday, as government financial support helped power a sharp rise in consumer spending.
This marked an increase on a revised rate of 6.3% in the first three months of the year, but was lower than forecasts of an 8.5% rise – stoking fears over a faster than expected slowdown in the world’s largest economy amid the spread of the Delta variant of Covid-19.
Shortages of workers, raw materials and computer chips in recent months have also threatened to weigh on growth and drive up inflation.

26 July
US Economic Turmoil: The Paradox of Recovery and Inflation
By Syed Zain Abbas Rizv
(Modern Diplomacy) The US economy has been a rollercoaster since the pandemic cinched the world last year. As lockdowns turned into routine and the buzz of a bustling life came to a sudden halt, a problem manifested itself to the US regime. The problem of sustaining economic activity while simultaneously fighting the virus. It was the intent of ‘The American Rescue Plan’ to provide aid to the US citizens, expand healthcare, and help buoy the population as the recession was all but imminent. Now as the global economy starts to rebound in apparent post-pandemic reality, the US regime faces a dilemma. Either tighten the screws on the overheating economy and risk putting an early break on recovery or let the economy expand and face a prospect of unrelenting inflation for years to follow.