FEEL NO PAIN
Strong consumer spending is creating hundreds of thousands of new jobs [[link removed]] each month, workers’ wages are rising [[link removed]] , and unemployment is near record lows [[link removed]] . But some economists and journalists remain so committed to their faith that a recession is imminent that they can conjure visions of economic contraction from any data they come across . A little bit of writerly creativity is all it takes to reconcile the good numbers with their bad vibes.
So instead of simply generating yet another headline about a looming economic downturn, a Wall Street Journal writer shows some rhetorical flair [[link removed]] and ponders whether we’re facing a “full-employment recession” — that is, a situation where maybe “the economy could be contracting, but you’re not seeing job losses .” And the CEO of Apollo Global Management offers a similarly absurd formulation, telling people to get ready for the “ non-recession recession [[link removed]] ,” which he defined as “a circumstance where financial markets feel some pain while the underlying economy remains strong .” And sure, the contradictory coinages are impressive, but if jobs are plentiful and the economy is healthy, why exactly is anyone searching for novel ways to suggest that things are actually bad?
Make it make sense.
Three Numbers [[link removed]]
90 percent of investors [[link removed]] surveyed by Bloomberg [[link removed]] agree that corporations have been raising prices more than their costs have gone up since the pandemic began in 2020. Profit margins for US corporations are at 70-year highs.
43 million Americans [[link removed]] will be required [[link removed]] to make payments on student loan debt beginning August 30th . As that date approaches, the private companies which service these loans are expected to send out millions of statements showing incorrect balances, payment amounts, and interest rates.
772,000 immigrants [[link removed]] working in Florida were supposed to be scared by recent anti-immigrant legislation , according to several lawmakers who backed the policy, but those lawmakers say they didn’t expect workers to do anything [[link removed]] except feel bad about it. Instead, thousands of farmworkers have found work elsewhere, many truck drivers are refusing to enter the state, and Florida faces a $12 billion hit [[link removed]] from their effort to exclude (and/or scare) immigrant workers from fully participating in the economy.
A Chart [[link removed]]
Take a step back from the political debate about the merits of the CHIPS Act and the Inflation Reduction Act, refocus your economic perspective on the real world, and the results are clear: the Biden Administration’s landmark initiatives to boost investment in semiconductor manufacturing and renewable energy are having a massive impact. New factories are opening across the nation, directly creating 800,000 new jobs [[link removed]] . And the benefits seem to be accelerating: as this chart shows, US manufacturing construction spending has increased dramatically in the past year — particularly in those industries receiving public investment.
a chart showing U.S. Census data about U.S. Manufacturing Construction Spending. It's peaked since 2018, close to $200B in recent times. [[link removed]]
Blowing up the Groupchat [[link removed]]
When economist Isabella Weber first argued that rising consumer prices are being driven by rising corporate profit margins, she was met with widespread disdain. Her insight was so far outside the assumptions of standard economic models that mainstream thinkers dismissed it as preposterous . But as a recent New Yorker profile [[link removed]] explains, Weber’s case has only grown stronger over time, with corporate profit margins hitting historic highs and executives regularly boasting on earnings calls about their ability to raise prices and increase profits. Weber’s journey from the margins of mainstream economic conversation to its center has some compelling human drama to it, but this isn’t simply a matter of making sure she gets the credit she’s due. Rather, the validation of her work means that the Federal Reserve’s effort to intentionally reduce investment in order to weaken the job market isn’t the only possible way to bring down prices. Instead of going after workers’ paychecks, we can choose to attack the economic policies and concentrated corporate power that have allowed executives to raise prices, boost margins, and pin the blame on “inflation.”
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