"These Happy Days are yours and mine
(oh Happy Days)
These Happy Days are yours and mine, Happy Days."
TV opening credits theme, "Happy Days," 1974
We should be happy.
Inflation is down. Unemployment is back at near all-time lows. Economic activity is at all time highs.
Look at three charts:
The charts tell a simple story. We had a Covid crisis and things got bad for a while. Biden and Democrats took bold action, over near-unanimous GOP opposition. They got blamed for spending too much, for causing inflation, for ruining Americans' work ethic. Democrats argued they were providing strong medicine to fix a health crisis. Now, with the Infrastructure and Inflation Reduction Acts, Democrats say they are addressing longer-term problems. Democrats predicted that inflation was temporary and due to supply chain and labor force disruptions, and that the economy would get better. And it is.
The cost to make things has gone down, and that is making its way into the inflation numbers.
The U.S. did not just enjoy a worldwide phenomenon. We are outperforming peer nations.
A year ago Fed chair Jerome Powell said he would inflict "pain." He was going to stop inflation by driving unemployment up and America into recession. The Fed engineered the sharpest rise in interest rates in history, so sharp that banks that invested in U.S. Treasuries needed rescue, and yet we appear to be experiencing that unicorn of macro economics, a "soft landing." Inflation is coming down, yet the economy is strong and unemployment is low. Happy days.
Americans are going through a period of adjustment. Some prices are down -- gasoline -- some prices are up -- goods that had relied on low-wage workers. Yesterday's post noted that college had become expensive in relation to incomes from jobs available to young, relatively unskilled workers. Fifty years ago people being paid at or near minimum wage could work their way though college -- even an expensive private college -- with summer and part time jobs, and graduate debt-free. I did. Now it is nearly impossible, even at the most affordable public institutions. We are seeing some "Bidenomics" here, too. Covid lockdowns and employment benefits enabled low-wage workers to re-evaluate their value. Employers complained they could not find employees. For workers, it was an opportunity. They saw that employers needed them. In Oregon, to get agricultural work done, one needs to pay at or near $25/hour. I have just received a bid to do some roof repairs, and roofers are billed at $50/hour.
Americans were enjoying a bargain in the price of goods and services in some industries, but they were paying a social and political price. America had created an underclass of people mired in poverty, unable to afford housing, unable to service debt, relying on public benefits to survive. The system seemed "rigged" against them, fueling populist resentment and frustration. Covid-era disruption created a "general strike." Coming out of it, labor realized it had more power to get paid a living wage. Services will cost more. Farm workers, hotel maids, retail clerks, and restaurant servers may live better lives.
People do not live charts. They live lives. In politics, it's the economy, stupid. Biden's challenge is to share the story that the economy in America is getting better and to get people to feel and believe it. The economy is getting better.
Tomorrow's post: Americans don't think it is getting better. It is the summer of our discontent.
Nothing short of miraculous what the Biden administration has done for this country after the disastrous presidency ahead of his. Despite lack of cooperation from republicans who still support a lying con man, he & his administration have truly saved this country from disastrous repercussions of the last administration before him. I am grateful.