For the last couple years, the public conversation about high inflation rates has provided corporate executives an easy excuse to raise prices further… regardless of what was actually going on with their own costs. But this phenomenon of “greedflation” has now been widely acknowledged, and the mood has shifted, and companies have begun to see more resistance to price increases. In other words: much like discourse about out-of-control inflation can make it easier for corporations to raise prices further, discourse about out-of-control corporate greed can make it harder to raise prices without a consumer backlash.

So now mainstream economic commentators have moved on to one of their favorite tricks: they’re coming up with ridiculous turns of phrase to try and obfuscate the situation. A recent standout is this description from an economist quoted in the Wall Street Journal, who opined that prices were stabilizing because “consumers are less willing to support profit margin expansion.” Yup, that's what they said: basically, the implication is that consumers had willingly made a conscious choice to boost corporate profit margins… and then changed their minds. Because we're supposed to believe that consumers volunteering to throw some more money up the income distribution is a thing that definitely happens, but corporations raising prices to pad profits is not. 

Make it make sense.

For weeks, the internet has been full of debate about how it is that so many people are expressing such negative feelings about the economy at a time when the key numbers on things like jobs, wages, and consumer spending are all quite positive. Some suggested it was because even though the spike in inflation rates last year has calmed, prices remain much higher than they were a few years ago. Others pointed to how ending pandemic relief programs left many people with less breathing room in their budgets, even if their wages had also increased. And still others pointed to global conflict and domestic political polarization: a lot of Americans are mad about a lot of things, and just generally feeling negative.

Well, the discourse may be in for a big shift, because the most recent consumer confidence data shows a sharp improvement in how consumers describe their state of mind. You can see from the graph below that this data is noisy and moves quite a bit, but the overall recent trend over the past couple years does seem to be positive, and to have coincided with slowing inflation and falling gas prices. Perhaps most promising, the underlying data shows consumer expectations of future inflation are down significantly, indicating that people are feeling better about feeling better. So now maybe it’s time to flip the script and start debating why people are increasingly confident while still wrestling with the overhang of 40 years of trickle-down economics.

You probably saw that Taylor Swift was Time Magazine’s person of the year, and you may also have heard that Peach Fuzz is their color of the year. But don’t sleep on Civic Action founder Nick Hanuaer’s new piece — also in Time — on the economic theory of the year: Bidenomics. 

While there’s been a ton of discussion lately about how the public mood about economy (including in this very email), there hasn’t been much out there on the economic theory that lays behind the economic outcomes we’re seeing. Nick’s piece fills that gap, laying out just how sharp a break Bidenomics marks from the past four decades of trickle-down thinking that focused on tax cuts for the rich, deregulation for the powerful, and wage suppression for everyone else. As the piece concludes: “The Reagan Revolution is over. Long live Bidenomics.”  

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