Let's show appreciation and gratitude towards each other's contributions on the board.
- Manlobbi
Halls of Shrewd'm / US Policy
No. of Recommendations: 3
"pure" capitalism is almost like a religion, cause ya gotta suspend disbelief to believe it is "pure". Link to a good article on reasons why so many Americans feel that the economy is doing poorly, even though LEI's show that it's doing well. Ratio of CEO pay to average worker pay is out of control, compared to "the good old days".
Politicians of both parties have rigged the tax code in favor of capital, and w2 employees are being left far, far behind.
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https://popular.info/p/if-the-us-economy-is-doing-..."most Americans still believe economic conditions are extremely poor ' as if the country was mired in a deep recession. What explains this discrepancy?"
"The unemployment rate stands at 3.5%, as low as it has been since the 1960s. Over the last year, the U.S. economy has added an average of 312,000 jobs every month. Despite predictions of a recession, economic growth has been 2.0% or higher in the last four quarters. Inflation, while still elevated, is down to 3.2%. As a result, real wages have increased slightly over the last year. "
"regardless of economic conditions, more and more people will describe the economy as poor because they oppose the current president. Since Joe Biden is president, many Republicans will continue to describe the economy as poor. This is reflected in the CNN poll, where 54% of Republicans describe the economy as "very poor," compared to just 15% of Democrats. "
No. of Recommendations: 5
What explains this discrepancy?"
"The unemployment rate stands at 3.5%, as low as it has been since the 1960s. Over the last year, the U.S. economy has added an average of 312,000 jobs every month. Despite predictions of a recession, economic growth has been 2.0% or higher in the last four quarters. Inflation, while still elevated, is down to 3.2%. As a result, real wages have increased slightly over the last year. "What explains it? These four charts:
https://fred.stlouisfed.org/series/LES1252881600Qhttps://www.eia.gov/dnav/pet/hist/LeafHandler.ashx...https://fred.stlouisfed.org/series/CSUSHPINSAhttps://fred.stlouisfed.org/series/MORTGAGE30USThe first is Federal Reserve Economic Data for real wages, the second is EIA's gas prices, the third is the Case-Schiller home price index, and the last is mortgage interest rates.
Basically, real wages have not yet recovered to pre-pandemic levels. They're actually still lower than before COVID hit. And prices are still very, very high. Sure, the
rate of inflation is "down" to 3.2%. But that's still higher than the decade before the pandemic. And again, prices are still very elevated - it's not like prices
returned to pre-pandemic levels the way real wages did. So gasoline prices - which are among the most visible of consumer prices - aren't
increasing quickly any more, but they're still close to $4.00 per gallon. Prices are still much higher than people are used to, which erodes people's confidence in the economy.
Meanwhile, the housing markets are causing a lot of pain. Mortgage interest rates are higher than they've been in 20 years.
Prices are still nearly twice what they were at the peak of the 2008 housing boom. Anyone looking for a house these days is very, very frustrated.
When Biden took office, the inflation rate was 1.3%, mortgage rates were 2.75%, and gas was $2.42 per gallon. Today, those figures are 3.2%, 7.2%, and $3.95 per gallon - all of which are vastly higher not only than from when Biden began his term, but the decade or so before that. Those are all things that voters
notice a lot, and affect their view of the health of the economy. It is not some big puzzle why voters have a negative sentiment about the economy. Other than the unemployment rate (which is very good) and maybe GDP growth (which is okay, but at best mediocre) most
current economic indicators aren't that great.
No. of Recommendations: 7
Yup, those charts you linked just scream out financial pain for working class people.
Inflation is slowing, but it's not going depreciation mode, so things are still getting more expensive. Energy costs are one of the main drivers. So what do we do ?
Drill,baby,drill and environment be damned ? Or disincentivize fossil fuels and watch gas and heating prices continue to put the squeeze on everybody except the top echelon who do not feel any financial pain, even if inflation continues to permeate thru our economy/sociey.
Should the Fed go back to ZIRP? I think the FED feels like they need to do whatever it takes now, while Biden is in office. As far as I know, Biden has not said a word about the FED policy. Contrast that with the temper tantrums Trump thru while he was in office and the FED began raising rates in 2018. Indeed, one could conclude that Trump threw gas on the inflation fire with his tax cuts, laying the foundation for this inflation.
I sure don't have the answer(s) needed to fix this, but sure would like to see our politicians focus on this, instead of the inane/insane culture wars. There are more important issues to the majority Americans than whether trans-males should be allowed to compete in female sports, or Hunter's laptop, or any of the other BS floating around.
From the article I linked, CEO's aren't exactly being generous with sharing the revenue that
has flowed into their coffers:
"in a new report by the Institute for Policy Studies (IPS). The IPS report, Executive Excess 2023, analyzes the 100 large public corporations with the lowest wages in 2022. The IPS report found that at these corporations, a group that includes many of the nation's largest employers, "CEO pay averaged $15.3 million and median worker pay averaged $31,672." That's a ratio of 603 to 1. "
"For example, at Dollar Tree ' a company that employs nearly 200,000 people ' the median wage is just $14,702, but its CEO, Michael Witynski, received $13.98 million in total compensation. That's a ratio of 951-to-1"
"Other major companies with low wages and massive CEO-to-employee pay ratios include TJX, (the parent company of Marshall's and TJ Maxx, 2,249-to-1), Coca-Cola (1,883-to-1), Yum Brands (the parent company of Pizza Hut, Taco Bell, and KFC, 1603-to-1), Chipotle (1,073-to-1), and Walmart (933-to-1)."
No. of Recommendations: 4
<<Most Americans still believe economic conditions are extremely poor ' as if the country was mired in a deep recession. What explains this discrepancy?>>
Vast wealth inequality?
The Gini coefficient is often used to determine a countries wealth inequality. The higher the number the higher the countries wealth inequality.
The U.S. currently has a rather high 85% Gini coefficient. Puts us right in line with Haiti and Gambia.
"Wealth inequality in America has grown tremendously, to the point where the top 10% of families ranked by household wealth own about 80% of the wealth pie."
"The bottom half of families ranked by household wealth own only 1% of the pie."
"An additional sign of economic insecurity? More than 10% of families had negative net worth."
"We find that families with a four-year degree or higher are doing quite well; they had roughly three-quarters of the wealth pie."
"On the other end of the spectrum, families with less than a high school degree or at most a GED have about half as much wealth at the median than families with the same education level did in 1989."
How do we address this issue? Getting those top tax rates back up to where they were in the 40's, 50's, 60's and 70's, and making some serious investments in education would be a great place to start.
https://www.stlouisfed.org/open-vault/2019/august/...https://en.wikipedia.org/wiki/Distribution_of_weal...
No. of Recommendations: 3
Energy costs are one of the main drivers. So what do we do ? Drill, baby, drill and environment be damned ? Or disincentivize fossil fuels and watch gas and heating prices continue to put the squeeze on everybody except the top echelon who do not feel any financial pain, even if inflation continues to permeate thru our economy/society.
U.S. domestic oil production is already virtually equal to it's all-time high (it's at 12.8 mbpd now, just shy of the 13.1 mbpd it got up to briefly right before the pandemic). The causes of high global oil prices are probably not related to constrained U.S. production. Though it's possible that oil companies are not expanding production faster due to concerns about having new investment become stranded.
From the article I linked, CEO's aren't exactly being generous with sharing the revenue that has flowed into their coffers:
I know - but honestly, that article has a "if I have a hammer everything looks like a nail" vibe to it. Economic progressives are deeply upset by unfairly high CEO pay, so their response to voters being despondent about economic conditions is to attribute it to....unfairly high CEO pay. But in reality, voters are probably more down on the economy because interest rates are super-high, and they're bearing the brunt of not only the inflation of the last year or so but also an ongoing inflation rate that's still higher than the decade before the pandemic.
No. of Recommendations: 3
"Wealth inequality in America has grown tremendously, to the point where the top 10% of families ranked by household wealth own about 80% of the wealth pie."
And with the amount of money sloshing around in our political system and corrupting it, this will be hard to address.
No. of Recommendations: 5
"I know - but honestly, that article has a "if I have a hammer everything looks like a nail" vibe to it"
I never got that vibe off of it. Remember the "supply chain bottlenecks" that were touted as one of the causes of inflation ? Workers were sent home because of Covid, driving supply down and prices up. That issue has been resolved. Then it was Cargo ships que'd up off of Long Beach that couldn't get unloaded, that's been resolved. We don't seem to have seen any price reductions after these major issues have been resolved, why is that ? I think CEO/Corp greed. You think otherwise, and that's fine, free country.
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From that article, on the subject of stock buybacks:
"For example, Lowe's, the home improvement chain, spent "$34.9 billion repurchasing its own stock over the past three and a half years." That's enough money to give each of its 301,000 U.S. employees a bonus of $46,923. Instead, the median Lowe's worker makes less than $30,000 per year. The buybacks enriched Lowe's CEO Marvin Ellison, who owns $103 million in company stock, other top executives, and investors. "
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The tax code and laws have been rigged, no check that, they've been written by the lobbyists for the benefit of the wealthiest corporations and individuals in America. Working-class Americans do not get next to any benefit from their employer buying back stock. But the corporate suite people sure do.
No. of Recommendations: 2
One factor in Americans' pessimistic view of the economy is partisanship. A study published in The Review of Economics and Statistics in May 2023 concluded that "partisan bias exerts a significant influence on survey measures" of economic conditions, and this influence is "this bias is increasing substantially over time." Specifically, "individuals who affiliate with the party that controls the White House have systematically more optimistic economic expectations than those who affiliate with the party not in control." Overall, the study says, the influence of partisanship has increased fourfold between the George W. Bush administration and the Trump administration. In other words, regardless of economic conditions, more and more people will describe the economy as poor because they oppose the current president. Since Joe Biden is president, many Republicans will continue to describe the economy as poor. This is reflected in the CNN poll, where 54% of Republicans describe the economy as "very poor," compared to just 15% of Democrats.
One of the big complaints has been going on for decades. There was a short period of time where the average worker could afford a home on one person's take home pay. Now many think they'll never be able to afford a home. We had to raise rates to quell inflation, but interest rates had been low for so long that I was wondering what economic levers were left. I think we've been lucky, but not knowledgeable enough to know.
No. of Recommendations: 6
"Since Joe Biden is president, many Republicans will continue to describe the economy as poor. This is reflected in the CNN poll, where 54% of Republicans describe the economy as "very poor," compared to just 15% of Democrats."
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I have a few Trump supporters in my social circle. We don't talk much about the "divide", but
every once in awhile opinions are swapped. They like to brag about how great the economy was in the Trump years, how it was going gangbusters ( their words, I've seen the #'s so I know better ).
So I'd be remiss if I didn't point out to them how the Trump tax cuts, during a "gangbusters" period of economic growth, were like throwing gas on the inflation fire. They don't want to hear that, though. They definitely don't want to hear that under Biden, the USA has actually fared better than the rest of the world.
The inflation genie has been let out of the bottle. It may slow, but it's not going to go negative, so prices are not going to come down, corporations will not lower prices once they've gotten consumers used to paying the elevated prices. I feel bad for people on the financial edge, they are getting hit hard by this. This is a huge issue for millions of Americans.
No. of Recommendations: 4
We don't seem to have seen any price reductions after these major issues have been resolved, why is that ? I think CEO/Corp greed. You think otherwise, and that's fine, free country.
Sure. Though CEO and corporate greed is not new, so it has limited explanatory power for why inflation has continued to be so high today when it wasn't high during the decade before the pandemic.
But that's not really what the article was arguing. It was asking why if the economy is doing well, why do Americans think it's doing poorly? It's right there in the lede:
The leading economic indicators show the U.S. economy is performing well, but most Americans still believe economic conditions are extremely poor ' as if the country was mired in a deep recession. What explains this discrepancy?
The article is wrong in not just its diagnosis, but in its initial assumptions. The U.S. economy is not performing particularly well. Sure, unemployment is low - but not lower than it was before the pandemic. Sure, GDP is growing - but at a relatively mediocre rate, and (again) no higher than before the pandemic. But interest rates, mortgage rates, many consumer goods prices (like gas) and home prices are at generationally high levels. These are all things that are very visible to Americans. These are the things that are different from four years ago. But the article doesn't mention any of them - which is just insane for an article ostensibly trying to figure out why Americans might be dissatisfied with the economy.
Even if you stipulate that CEO's are overpaid and corporations are greedy, that doesn't necessarily mean that those two factors explain why Americans are pessimistic about the economy. Again, it's not like the idea of a corporation's profits being returned to shareholders through dividends and share repurchases - instead of being given out as a bonus to workers - is a recent change to the U.S. economy. Nor is the fact that CEO's are able to capture more (though still an insignificant fraction) of their company's earnings. But $4.00 gas, 7% mortgages, and really high inflation are recent changes. So if you're looking for an explanation of why Americans think economic conditions are poor, those are much better candidates than the things discussed in the article.
