28 Comments
Apr 16, 2023Liked by Claudia Sahm

My rent has increased over $500 per month for the last 2 years. Maybe that’s not as much as people living in NYC or LA, but the area I live in doesn’t have high paying jobs. Also, my electric bill has almost doubled, since last year. For most Americans, our salaries have not been keeping up with increases in daily living expenses. The Federal Reserve doesn’t care about average Americans. They keep bailing out failing banks and corporations. Inflation is not due to increased wages, but monopolistic corporate greed. Most affluent Americans could care less about working class Americans. Even though I have a college degree in a field with an extreme shortage, it has not netted me much job security. It’s not the negative news coverage. It’s our economic reality.

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Apr 16, 2023Liked by Claudia Sahm

Ah, the age old question of all experts; do I communicate purely the message? Or, do I tatter it with a white-wash, to make the message communicable to how I perceive that the target audience will interpret it(bias adjustment).

I vote for #1. As an expert in your field you do not necessarily have a deep understanding of the human condition. Aggregate data only takes us so far. It describes gross result of an action, not at all the 'how' or 'why' that aggregate result came about.

There's a lot there Claudia. The 1.8 negative bias ratio doesn't surprise me. We have remember the 70's or 80's compared to present-day is like oranges & apples different. This is because we are living in a present day with the individual emotional/cognitive affects of:

- an accelerating expansion in volume of daily alternate information presenting itself, from a multitude of directions 24/365

- at least an order of magnitude greater number of distractions, segues, to the individual's concentration, during the work day

- a regional war that has both implications for our allies, and some unknown substantial probability of going nuclear

- experiencing an America in the throes of a top Leadership Deficit for at least 2 Presidential election cycles now

- many of The People having a perception that our Congress is dysfunctional—incapable of 'compromise', and unable to move forward on Lawmaking of any substance

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Apr 17, 2023Liked by Claudia Sahm

My wife has CNBC on while editing financial news working from home. (Mostly we need background sound on to keep our anxious dog from freaking out when there's noise in the hall). We're staying in a studio apt while renovating our main apt, so suddenly I'm exposed to it. The thing I pick up over and over on there is lots of recession talk--but the evidence and concern is for what they call an "earnings recession" -"We're already in one" --what does that mean? It means that the *growth* of companies profits is slowing down!

When I read this post of yours, it dawned on me that the real interest in recession comes from the business community--especially the big investors. Not jobs, wages, or overall prosperity, but overall yields for professional investors. There are many many economists employed by finance and investment corporations and the largest amount of news that is reported out is by business reporters, embedded to one degree or another with business interests. I'm pretty sure that they really don't realize how their views are skewed by this context. (My wife -who's been around the block enough and doesn't need to be impressed by big investors-assures me that this effect on journalists is real)

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Apr 17, 2023Liked by Claudia Sahm

That must have been jarring to buy something at a farmer's market and have a vendor ask you if you were scary because you were wearing a Women in Economics t-shirt, Claudia. Maybe next time wear a Nationals t-shirt lol except then you might be asked if you hate the Orioles ha ha.

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Apr 17, 2023Liked by Claudia Sahm

Great post. From my perch, Each industry is in its own world post pandemic. The good news for the lower quartiles workers is that there is still demand. Thus wages are not going down. In the white collar jobs it depends on location and job type. I get this from asking my friends who own companies and friends working for companies ( all in US national ). If people feel their job is safe they hold back spending at first then start spending. If you live paycheck to paycheck you have no choice but to spend.

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“Fear not!” One of my favorite, all-time quotes.

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Economists wouldn't be scary if more of them had their feet on the ground instead of their heads in the clouds. Like you. Such a fresh voice compared to almost every economics professor most of us had to suffer through.

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I suspect another factor is at play that is often unappreciated: the asynchronous nature of activity in our vast and diverse economy. There are micro recessions going on all the time. Just not in the same place or industry. Or with the same severity or duration.

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Insightful article on the disconnect between economic indicators and public sentiment. It's worrisome that the constant stream of negative news may contribute to a self-fulfilling cycle of economic downturn. In your view, how can we achieve a more balanced presentation of both positive and negative aspects of the economy in news reporting? Additionally, how can we motivate economists and policymakers to communicate more effectively and transparently with the general public to avoid misunderstandings or unwarranted fears?

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I never understand this chart about recession and people hearing "bad news". I don't think it's an important econometric measure for anything. Why people say they think economy is bad? I think it has to do with political climate & turmoil which spills into social psyche. The political climate is highly polarizing, uncivil and also plagued with a lot of misinformation. GOP & Trump says "Dems are destroying America" (oh boy) , "we have worst inflation ever" (even when it has gone down remarkably), "i built best economy in the world but radical left drove it into the ground" (yeah right). People hear these kind of talk & now this get repeated day in & day out especially on sewers of social media. 10-15 years ago, we didn't have social media which is now a major source of information gathering. Social media is full of pessimism, disinfo, doomsday garbage which is mostly spread by right wing trolls. I hear on right wing platforms that World is gonna dump dollar, social security fund will go bankrupt in few years, national debt is exploding etc etc and a lot of non sense.

I am not saying that economy is great & perfect. It's not. A lot needs to be done for economic transition for energy security (climate change), addressing economic disparity (which is a grave problem), improving standards of living, pushing for economic rights (student debt relief, public healthcare, jobs program etc), upgrading national infrastructure etc. All that has to be done. But things are moving in the right direction and it's a particular party that holds nation hostage on things like Debt ceiling & blocking meaningful economic reforms.

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Politics aside, does the average view matter? We don’t yet see an impact on consumption. Housing has softened, but little more in the economy. Financial indicators, except for the yield curve, don’t appear to be flashing red. Personally, I’ll get worried when there is blood in the financial markets. But, general nervousness may just be noise and uncorrelated with anything but partisan votes.

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The premise of this article is wrong. The person you were talking to at the farmers market recognized that you might be one of those economists that are heard saying through the media that we must have a recession to halt inflation. And that is because our ruling class has decided to take the Volker crush the economy route to ending inflation rather than a more sophisticated and direct regulatory approach to limit price driven inflation through a bit of good old fashioned Truman style excess profits taxation.

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Given that the Fed is intentionally trying to reduce consumer spending to reduce services demand/inflation, wouldn’t the ideal circumstance be creating an ‘atmosphere of uncertainty’ that motivates consumers to slow spending, without first having lost their jobs?

It’s anecdotal, but from my own observations and reports from others around the country, people seem to still be spending enthusiastically, to say the least.

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