NEW YORK (AP) — Most business economists think the U.S. economy could avoid a recession next year, even if the job market ends up weakening under the weight of high interest rates, according to a survey released Monday.
Only 24% of economists surveyed by the National Association for Business Economics said they see a recession in 2024 as more likely than not. The 38 surveyed economists come from such organizations as Morgan Stanley, the University of Arkansas and Nationwide.
Such predictions imply the belief that the Federal Reserve can pull off the delicate balancing act of slowing the economy just enough through high interest rates to get inflation under control, without snuffing out its growth completely.
…
High rates work to slow inflation by making borrowing more expensive and hurting prices for stocks and other investments. The combination typically slows spending and starves inflation of its fuel. So far, the job market has remained remarkably solid despite high interest rates, and the unemployment rate sat at a low 3.9% in October.
The reason they’re getting down votes is because they’re making claims about purchasing power being depressed despite no data to back it up, with data from many angles showing purchasing power has been largely restored in comparison to before the pandemic, at least in the United States I should be clear. Many western countries had worse inflation than the US and have not had their purchasing power catch up again. Then it goes to “well we don’t trust the numbers we feel differently.” And how can you argue with feelings? It’s just not a productive discussion. Not to mention distracting from many other important issues in our economy. It’s not like there was a perfect economy in 2019. And it still isn’t, even with inflation slowed and wage increases largely compensating.
I mean, this article from from AP is what we’re all talking about:
https://apnews.com/article/inflation-prices-interest-rates-economy-federal-reserve-1f83d45fc6e30c6864d1b02913ec60c6
Basically, the things that actually matter to most people – food, fuel, housing, utilities – remain more expensive than before the pandemic by significant margins. And those prices will never come back down. The best most can hope for is to earn more money to offset the price hike – which, for most people, means taking on new or additional employment just to be able to get back to where they were before the pandemic. People have lost ground. That’s the problem here.
The whole point is on average people haven’t lost any ground cause compared to before the pandemic! None of these articles talk about the 20% increase in wages over this time, just the price increases. That’s wages per hour increasing by 20% mind you, not people taking up additional jobs.
The ap has just picked a couple of the highest ones out of the entire index. Read the whole article. Not all the day to day essentials have increased that much. Average them all together and you get 20% increased cost of living over the last 4 years. Prices are 20% higher on average before the pandemic. Wages are also 20% higher on average. So real buying power is about where it was before the pandemic on average. Inflation month to month is barely even moving anymore, prices were unchanged September to October. Wages are increasing faster than inflation right now so things will continue to improve. But people aren’t walking around with their pay stubs from 2019 and 2023 while in the supermarket going, oh milk increased in price 20% over 4 years but it looks like my wage did to. People are psychologically hung up on the high price they see every day. And everytime we have a bird flu epidemic wiping out tens of millions of chickens in our horrible factory farms keeping things like eggs artificially cheap, reporters are right there ready to write sensational headlines and inflame people even more. There’s essentially nothing left to do from an inflation perspective at this point anymore, except keeping unemployment low and labor demand high so wage increases can continue and real wages can increase.
Real wages December 2019 (meaning wages in relation to inflation anchored to 1982-1984 dollars): https://stats.bls.gov/news.release/archives/realer_01142020.pdf
Real wages October 2023: https://www.bls.gov/news.release/pdf/realer.pdf
If you look you’ll note they are higher now than then. Wage increases have compensated for inflation. But for the media “inflation back to normal slow steady pace, wage increases over the last four years have compensated, wages continue out pace inflation currently” just isn’t a very attention grabbing headline. Media will always be biased toward sensationalism.
That you don’t seem to get what we’re saying is amazing. What you are talking about does not matter to most people – their own lived experience of not being able to afford basic necessities, or having to draw on savings and retirement income to afford them, are all they see. You can shout numbers at people all you like, but all they – and I – hear is, “Your own lived experience is wrong, and I know better than you do about your day to day life.”
So, let’s grant for argument’s sake that the numbers you’re citing actually say what you imply – that wage increases have made up for inflation for most people, and therefore no one has any reason to complain. You do realize that desperately job hopping to try to stay where you started economically is enervating and miserable, right? To spend three years post-pandemic finding new work, retraining, striking, and all the rest, only to find yourself economically no better off than when you started? What a nightmare.
I get that you have a pile of numbers that say everything’s rosy – but most regular people appear to disagree with you, judging by consumer sentiment polls and other surveys. The answer in that case isn’t to double down and declare that people are too stupid to know whether they’re doing okay financially – the answer is to ask yourself whether your measures are wrong, or your data isn’t capturing something critical.
These are all realities of our economy in general and are unrelated to inflation! I’m not saying everything is rosy. Like our economy in 2019 was perfect. I’m pointing out purchasing power on average is the same before the pandemic as it is now, on average. So if you’re dissatisfied it’s not inflation. I’m trying to get people to move past this whole all our problems are from inflation thing. Which is just not supported by any data. How about we talk about income inequality? How about we talk about tying our Healthcare to our job? How about we talk about half of all companies flagrantly breaking laws and union busting during labor union negotiations? How about we talk about the insane concentration of wealth and inability of our tax system to deal with this investor class, leading to high deficits that can’t cover very necessary social services?
These are all important problems you’ve brought up. None are to do with inflation being out of control. And these lazy sensationalist media stories with out of context numbers where “eggs expensive, wow,” is just distracting from issues that actually are still plaguing us! By design or laziness I do not know.
And I’m telling you that your approach to doing this is, rhetorically, disastrous. You come across as both smug and dismissive of people’s suffering and anxiety – and your response to reading me say that musn’t be, “Well, this person is irrational and not willing to engage with data.”
Yes, people are dissatisfied with basically… all of how modern nation states are organized and run, from government to business to day-to-day social interactions.
But the whole premise of democracy is that the people, in aggregate, know best how to direct our lives. And what poll after poll says is, people are frustrated in particular with the perceived decline in their purchasing power. That perceived decline comes directly from making more money and yet only being able to afford the life they had before the round of inflation started. The very “wage growth” that you are claiming has mooted the issue of inflation.
So, even if it’s true that, on average, people’s spending power is the same now as it was before the pandemic – which may not be true, depending on whether the already wealthy, to whom most of the gains have gone since the pandemic, are skewing that average – that is not a victory. It is, at best, a depressing reminder that people live in a system that cares more about aggregate statistics on a balance sheet than it does about their actual lives.
Where did I call it a victory? Maybe a very slight relative victory compared to the disastrous real wage loss that occured during inflation flights in the 1970s and 1980s and never really recovered until the 2010’s. I’m calling it a distraction from actual problems at this point.
Also it’s average wage growth across the whole country, people make more money as they advance in their careers. So average real wages across the entire economy remaining constant doesn’t literally mean individuals have not advanced in their own personal financial situation. It’s disingenuous to represent it that way.
This is, like… you don’t hear yourself, do you?
Me: “People are miserable about the specific thing you’re pointing at to try dismiss discussion on this topic.”
You: “That’s because discussions on this topic are a distraction from problems that I deem more important.”
Me: “Okay, but you do realize that people don’t agree with your perception of the situation, or your prioritization of the problems, and that by insisting on this point in a pedantic way you come across as smug and dismissive.”
You: “Yes, but what about my perception of what’s an actual problem?”
You can shout from the rooftops that we have bigger fish to fry – and I might even agree with you – but people can’t even think about bigger problems as long as they’re struggling to pay the bills! People report having trouble paying the bills! Large swathes of the American public are drawing on their retirement savings to get by! Whether you think the inflation situation and its aftermath is an “actual problem”, telling people they’re wrong and throwing numbers at them is just not going to be an effective strategy here.
You aren’t hearing me. And you’re (literally) putting words in my mouth. Last comment from me.
If everyone is screaming about going on inflation fighting crusades and look how bad inflation is, meanwhile inflation is flat now and purchasing power is the same as it has been. Well you’re not gonna improve anything for anyone by focusing on inflation any further at this point (unless you’re proposing increasing interest rates to the point that you crash the economy enough to cause deflation after no one can afford anything so prices have to drop, or switching to a centrally planned economy, I wouldn’t recommend either). So let’s talk about those many economic issues that are out of control that will improve the situation and ability of people to get things they want and need. Like improving income inequality. There’s a way to increase your purchasing power. Or making sure the rich pay their fair share so social security is solvent so people in retirement and not working get increases compensating for inflation. Feel free to go on harping about inflation that’s not even happening any more though I guess.