Friday Macro Unwind - July 22
We made it!
In today’s post, I share some of what I found interesting this week. Happy weekend!
Source: Getty Images.
Here’s your humor relief. Joey Politano’s meme below riffs on an earlier meme: “money printer go brrrr.” That’s about the Fed trying to speed up growth. Joey turns it around for the Fed now trying to cool things down, “money vacuum go brrrr.”
Sign up for Joey’s excellent, data-driven Substack too.
Here’s Peter Coy’s excellent piece arguing that a recession is worse than inflation. He draws on research and experts, including me.
One expert is Adam Smith,
An old joke goes: A recession is when your neighbor is out of work; a depression is when you’re out of work. The idea, of course, is that people are self-centered. In reality, though, we do care when the unemployment rate jumps, even if our own jobs are secure. The first sentence of Adam Smith’s “Theory of Moral Sentiments” says as much: “How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it, except the pleasure of seeing it.”
I agree. The human costs of a recession are why we fight to avoid them and fight to soften the blow when in one. We need to be fighting hard now.
Speaking of recession risks, yesterday we learned that initial claims for unemployment insurance rose again last week, though the pace is still low. It’s a further sign of slowing growth. The Fed is raising rates aggressively, and George Pearkes warns that risks doing too much, throwing the economy in reverse, and causing a recession.
The Fed is complete!
Michael Barr was sworn in as Vice Chair of Supervision this week. It’s the first time since 2013 that all seven seats were filled. There’s the ‘2022 Class Photo.’ Look at those smiles! Mark Spindel also shares the ‘1914 Class Photo’ of the first Board. We have come a long way. The New Fed.
Finally, Julia Raifman, a public health professor and tireless voice for families during the Covid crisis, shows the rising food insufficiency. Last year, the new Child Tax Credit reduced poverty and food insufficiency, but now the program is gone.
I interviewed Julia last year, mainly about Covid and the lack of public health response. She’s an inspiration to me in the passion and expertise she brings.
Ok, that’s a small sampling of what caught my eye on Twitter this week. I plan to make this a regular feature to share other voices. I will keep writing my regular posts.
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I would love to read more on the Phillips curve and how people are still coming back to it. My understanding is that inflation is still something that we just accepted as bad above a certain percentage, without a clear understanding of why we set that percentage there. Didn’t New Zealand come up with the 2%?