The Latest from the Prospect
 â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â
Â
View this email in your browser
<[link removed]>
**SEPTEMBER 1, 2023**
On the Prospect website
* Luke Goldstein and Jared Facundo on how steel monopolies affect labor
<[link removed]>
* David Bieloh: United Colors of the Apocalypse
<[link removed]>
* Luke Goldstein finds still more public subsidy for Big Ag
<[link removed]>
Kuttner on TAP
****
****
****
****
****
****
****
**** The Economy: Steady as She Goes
There are too many realms with public consequences where the private
sector is inefficient and rapacious. Some might call the remedy
socialism.
To a remarkable degree, the economy is doing just what we want it to do.
The Thursday report on the Personal Consumption Index
<[link removed]>,
the Fed's preferred measure of inflation, showed prices increasing at
just 0.2 percent in July, for an annual inflation rate of 2.4 percent,
very close to the Fed's own 2 percent target.
The Friday jobs report
<[link removed]>,
meanwhile, showed that the economy is continuing to create jobs, with
187,000 added in July. The rate of job growth, though still strong, has
been steadily falling, from over 300,000 a month in 2022 to under
200,000 a month in the past quarter. And the May and June numbers were
revised downward sharply.
Wages have been increasing slightly faster than inflation in 2023
<[link removed]>,
after two years of falling behind prices. If anything, they need to
increase even faster, after a four-decade real decline.
The unemployment rate rose slightly in July, from 3.5 to 3.8 percent,
mainly because labor force participation increased.
As I wrote in this broad assessment of the economy
<[link removed]>,
the supposed trade-off, in which a low unemployment rate produces
alarming price pressures, is not happening this time because the
declining inflation rate is the result of supply chains returning to
normal-a whole other variable. And some of the same Biden-era public
investments that stimulate growth are also helping to restore supply,
and thus to moderate prices.
It's clear from this trend that the Fed made a huge analytical and
policy mistake when they got wedded to the idea that the long-term
inflation rate had to be 2 percent. The economy can do perfectly fine
when inflation is in the 3 percent range, as it was during much of the
postwar boom. The 2 percent number was picked out of thin air in 2012 by
then-chair Ben Bernanke, and the current chair Jay Powell found it
convenient to invoke the figure as a target when he went on his higher
interest-rate crusade.
Just as the current economic situation defies the assumptions of
standard models, there is another source of inflation that should not be
the predicate for higher interest rates and macroeconomic tightening.
That is the impact of global climate change.
Warming has already destroyed crops and put upward pressure on commodity
prices. According to the American Farm Bureau Federation
<[link removed]>,
37 percent of U.S. farmers report plowing under crops that won't reach
harvest maturity because of extreme heat and drought.
A major research report by the European Central Bank
<[link removed]>
predicts that global climate change could increase food inflation by
between one and three percent per year.
Climate disasters are already raising insurance costs to homeowners and
businesses. An analysis S&P Global Market Intelligence did for The Wall
Street Journal found that double-digit rate increases
<[link removed]>
have been approved in 31 states since the beginning of 2022.
In addition, climate investments to protect against storm surges and
harden infrastructure will cost trillions of dollars. That will produce
either higher utility rates, higher taxes, or increased public debt.
Financing that public debt will require low interest costs, not elevated
rates.
So the Fed is in a wholly unfamiliar economic landscape. It is perverse
to base its policies on models that no longer describe reality, if they
ever did.
~ ROBERT KUTTNER
To receive this newsletter directly in your inbox, click here to
subscribe. <[link removed]>
Follow Robert Kuttner on Twitter <[link removed]>
[link removed]
American Steel's Succession
<[link removed]>
Mergers temporarily strengthen labor's bargaining chip. But in the
long run, anti-monopoly experts say, corporate power crushes workers and
consumers. BY LUKE GOLDSTEIN, JAROD FACUNDO
United Colors of the Apocalypse
<[link removed]>
A new Pantone series for 2023 BY DAVID BIELOH
Big Ag Opens Another Vein of Public Funding
<[link removed]>Money
from the Climate-Smart Commodities program, designed to reduce
agriculture emissions, is going disproportionately to multinationals.
BY LUKE GOLDSTEIN
Â
[link removed]
Click to Share this Newsletter
[link removed]
Â
[link removed]
Â
[link removed]
Â
[link removed]
Â
[link removed]
YOUR TAX DEDUCTIBLE DONATION SUPPORTS INDEPENDENT JOURNALISM
<[link removed]>
The American Prospect, Inc., 1225 I Street NW, Suite 600, Washington, DC xxxxxx, United States
Copyright (c) 2023 The American Prospect. All rights reserved.
To opt out of American Prospect membership messaging, click here
<[link removed]>.
To manage your newsletter preferences, click here
<[link removed]>.
To unsubscribe from all American Prospect emails, including newsletters,
click here
<[link removed]>.
