U.S. Economy January 2024-

3 December
Assessing Trump’s proposed 25% tariff on imports from Mexico and Canada
Joshua P. Meltzer
– A tariff-first approach to addressing U.S. issues with Canada and Mexico undermines the key role of trade and investment across North America underpinned by the United States-Mexico-Canada Agreement (USMCA).
– Ignoring USMCA commitments may undermine trust in U.S. trade agreements and cooperation.
– The proposed tariffs could hinder efforts to address broader strategic issues, particularly with China.
(Brookings) President-elect Trump recently announced that when he begins his term on January 20, 2025 he will implement 25% tariffs on all imports from Mexico and Canada unless these countries control the flow of illegal drugs, especially fentanyl, and illegal immigrants. Trump also proposed an additional 10% tariff on imports from China due to concerns about fentanyl. Whether these proposed tariffs will address U.S. concerns around fentanyl and illegal immigration remains to be seen, but the costs of these tariffs for U.S. industry may be high enough that they will become economically and politically unsustainable. This will be even more so if Mexico retaliates, as Mexican President Claudia Sheinbaum has threatened to do. While tariffs on China seem justified, a tariff-first approach to addressing U.S. issues with Canada and Mexico undermines the key role of trade and investment across North America underpinned by the United States-Mexico-Canada Agreement (USMCA); the regional agreement can play an important role in reducing U.S. dependencies on Chinese-centered supply chains and in securing alternative sources of critical minerals.
First, it is important to be clear about the costs of a 25% across-the-board tariff on imports from Mexico and Canada. Various studies have confirmed that the 25% tariff on imports from China initiated by the Trump administration and then expanded by the Biden administration created costs and reduced investment. This is not to say that tariffs are never justified, but it is important to be clear about some of the costs associated with them.

19-20 March
Paul Krugman: The Emperor’s New Philosophy Of drunkards, lampposts and economic doctrines
I thought I might weigh in to support and enlarge upon an exceptionally clear post by the always very good Adam Tooze about the commentariat’s sanewashing of Trumpian economic policy.
… My point is that Trump believes many blatantly false things that suit his prejudices. Why imagine that he and his courtiers have sophisticated ideas and a deep strategy when it comes to international economics? On the surface, Trump’s trade policy looks stupid and destructive. Dig deeper, and you discover that this first impression was completely valid. Trying to pretend otherwise is just misinforming readers.
Chartbook 363 Stockholm syndrome in Mar-a-Lago: The belief that “something must be done” and the sanewashing of economic policy in the age of Trump
Adam Tooze
… We ask: who inside MAGA 2.0 is thinking and what are their thoughts? We then relate that to our own efforts to diagnose America’s history and the history of the world economy. At the very least we need to explain how Trump 2.0 happened. Sometimes we will find a match between a strand of policy from inside MAGA and our own analysis and it is tempting to label that as “MAGA for thinking people” and to look for continuities with the Biden team etc. That mode of analysis is reasonable. To historically minded people it is appealing for obvious reasons. But it puts us at risk of is underestimating the radicalism of the break marked by the Trump administration. In search of historical context we miss what is most historically significant. We avoid facing the conclusion that the vision of a Mar-a-Lago Accord may have more in common with grift, a protection racket or a facelift pandering to the ignorant vanity of an old man than with economic policy as we have hitherto known it. Faced with Trump, the risk is that conventional realism is a form of escapism.

Heather Cox Richardson March 13, 2025
The blame for the falling market in the United States today can be laid squarely at the feet of the new presidential administration, with the tariff war it has instigated and the sweeping cuts it has made to United States government employment. President Donald Trump and his staff insist that the pain he is inflicting on Americans will pay off in long-term economic development, but they have deliberately thrust a stick into the wheels of a strong economy.
It is an astonishing thing to watch a single man hamstring the United States economy. It is also astonishing to watch Republican senators try to convince the American people that a falling stock market and contracting economy is a good thing. …
Stocks Tumble Into Correction as Investors Sour on Trump
The S&P 500 is now more than 10 percent below its last record high — a line in the sand for investors worried about a sell-off gathering steam.

11 March
Trumponomics: The Man Behind a Grand ‘Mar-a-Lago’ Plan (podcast)
(Bloomberg) Over just a few weeks, US President Donald Trump has turned the Western security alliance on its head and unleashed a slew of tariff threats (and tariffs) on China, Canada and Mexico (with many reversals and retreats). At the same time, talk has intensified over a so called “Mar-a-Lago accord” named after Trump’s Florida home and aimed at deliberately weakening the dollar. On this week’s episode of Trumponomics, host Stephanie Flanders discusses this with guests Shawn Donnan, senior writer for economics with Bloomberg, and Mark Sobel, the US chairman of the Official Monetary and Financial Institutions Forum. What ties together Trump’s security and tariff bluster? A paper written in November 2024 by Stephen Miran, where the idea of such a deal first appeared. Miran, a former US Treasury official who went on to work as a strategist in the private sector, is now poised to lead Trump’s White House Council of Economic Advisers.

Trump, Bitcoin, and the Future of the Dollar
Carla Norrlöf
(Project Syndicate) By launching new trade wars and ordering the creation of a Bitcoin reserve, Donald Trump is assuming that US trade partners will pay any price to maintain access to the American market. But if he is wrong about that, the dominance of the US dollar, and all the advantages it confers, could be lost indefinitely.
…the US government’s decision to join the reserve-diversification party raises serious doubts about the future of its own currency’s hegemony. If more countries or institutions decide to hold BTC instead of dollars, global demand for dollar reserves could decrease over the long term. Legitimizing a rival store of value may shake confidence in the greenback, eroding America’s global reserve-currency status and the advantages it confers. Without strong international demand for the dollar, the US could ultimately lose its “exorbitant privilege” to print and borrow at low interest rates. Endorsing BTC while defending dollar dominance thus requires a delicate balance.

10 March
US stock market loses $4 trillion in value as Trump plows ahead on tariffs
S&P 500 down over 8% from Feb 19 all-time high
Nasdaq confirmed 10% correction from its Dec peak last week
S&P 500 P/E moderates but still high vs historical average
Delta Air Lines cuts forecast on growing economic uncertainty
Tesla loses more than $125 bln in value in one day
(Reuters) – President Donald Trump’s tariffs have spooked investors, with fears of an economic downturn driving a stock market sell-off that has wiped out $4 trillion from the S&P 500’s peak last month, when Wall Street was cheering much of Trump’s agenda.
A barrage of new Trump policies has increased uncertainty for businesses, consumers and investors, notably back-and-forth tariff moves against major trading partners like Canada, Mexico and China.
The Trump Slump is now
You can’t take a battering ram to every major institution in America and expect the economy to do well
Robert Reich
Corporations are pulling back from investing in new productive capacity — additional jobs, equipment, factories — because Trump’s and Musk’s chaos makes it impossible for them to gauge what the future will bring. Joblessness is rising.
The S&P 500 was down more than 2 percent in [Monday] morning’s trading — after last week’s 3.1 percent drop (the biggest drop in six months) — signaling that investors are spooked.

7 March
Trump’s Crypto Reserve Is Really Happening -Now what?
By Ben Walsh
It’s hard to think of anything that would be less useful for America to stockpile.
(The Atlantic) Yesterday, the president signed an executive order creating both a “Strategic Bitcoin Reserve” and a “Digital Asset Stockpile” made up of different kinds of cryptocurrencies. The bitcoin stockpile, which presumably will be the larger of the two, amounts to “a virtual Fort Knox for digital gold,” Trump said during a crypto summit at the White House earlier today. “‘Never sell your bitcoin.’ That’s a little phrase that they have. I don’t know if that’s right or not. Who the hell knows.”
There are reasons for governments to stockpile essential commodities. America has a Strategic Petroleum Reserve to protect against disruptions in the global oil market or for use during natural disasters or other emergencies. China’s strategic pork reserve helps the government keep prices stable, and South Korea recently had to pull from its strategic cabbage reserve during peak kimchi season. But a crypto reserve would serve none of these functions. The ostensible idea is that stockpiling crypto could help “drive economic growth and technological leadership,” as a fact sheet for the executive order states. But unlike oil or even cabbage, crypto does not serve the core functioning of society. It’s a volatile, highly speculative asset with little proven real-world application that regular old U.S. dollars can’t already account for. It’s hard to think of anything that would be less useful for America to stockpile.

4 March
Mohamed A. El-Erian: US Recession Odds Are Becoming Unsettlingly High
It’s only a matter of time before economists start slashing growth forecasts for the American economy.
(Bloomberg) The notion of a US recession seemed remote just a few months ago, a mere blip on the radar of economic possibilities. More recently, however, that picture has started to change. A downturn, while still a risk scenario, is no longer unthinkable. A confluence of factors, from policy uncertainties to fragile financial markets, is casting a shadow over the world’s largest economy.
Several key financial indicators are already flashing yellow. The yield on 10-year Treasury bonds has fallen about 70 basis points in recent weeks, while oil prices have slipped below $70 a barrel. These moves coincide with a string of disappointing economic data releases, reflecting growing apprehension about the immediate consequences of President Donald Trump’s trade policies and public sector reforms. Indeed, judging from recent surveys, policy uncertainties have already dampened business and household confidence, clouding the economic outlook. This spreading weakness is manifesting itself in three distinct stages.

3 March
Prices rose along border ahead of Trump’s tariffs — now disruption looms
(AP) The prospect of a North American trade war has already thrown the global economy into turmoil, with consumer confidence tumbling, inflation worsening and the auto sector and other domestic manufacturers bracing for a downturn.
Trump dismissed concerns that tariffs are largely paid for by consumers through higher prices, saying: “It’s a myth.”
It is possible for a stronger U.S. dollar to offset some of the costs, but most economic modeling shows tariffs will effectively amount to billions of dollars in tax hikes nationwide. Along the border, the reality is that prices were already rising in anticipation of Trump’s announcement, and much more disruption now looms.

2 March
Trump names cryptocurrencies in strategic reserve, sending prices up
Trump names bitcoin, ether, XRP, solana and cardano for strategic reserve
Bitcoin and ether rise more than 10% on the news
Trump has moved quickly to back crypto industry policy priorities
(Reuters) – U.S. President Donald Trump on social media announced the names of five digital assets he expects to include in a new U.S. strategic reserve of cryptocurrencies on Sunday, spiking the market value of each.
Trump said in a post on Truth Social that his January executive order on digital assets would create a stockpile of currencies including bitcoin , ether , XRP , solana and cardano . The names had not previously been announced.
Trump Announces ‘Crypto Strategic Reserve’
(Forbes) President Donald Trump said Sunday the U.S. will create a “crypto strategic reserve” that includes major cryptocurrencies like bitcoin and ethereum—boosting crypto prices—the latest effort by Trump to court the cryptocurrency industry as he’s become a major crypto backer in recent months.
A national crypto reserve will “elevate this critical industry after years of corrupt attacks” Trump said, adding he directed his administration to “move forward on a Crypto Strategic Reserve” that includes cryptocurrencies XRP, solana and ADA.
He then added a second post saying the reserve will “obviously” include bitcoin and ethereum as the “heart of the Reserve,” saying he “loves” the top two cryptocurrencies.
Trump’s announcement Sunday builds on an executive order Trump issued Jan. 23 directing his administration to create a “working group” to propose a regulatory framework on digital assets, which includes evaluating a “national digital asset stockpile.”

27 February
U.S. Economy Shows Signs of Strain From Trump’s Tariffs and Spending Cuts
Consumer and business sentiment is wobbling as fiscal support fades and fears rise that tariffs will lead to higher prices.
(NYT) The United States economy is starting to show signs of strain as President Trump’s abrupt moves to shrink federal spending, lay off government workers and impose tariffs on America’s largest trading partners rattle businesses and reverberate across states and cities.
Funding freezes and firings of federal workers combined with the prospect of costly trade wars are souring consumer sentiment, raising inflation expectations and stalling business investment plans, according to recent economic surveys.
Local economies are also bracing for a sudden withdrawal of fiscal support, forcing officials to contemplate tax increases or municipal bond offerings to stabilize their budgets. While Mr. Trump has acknowledged that his policies could bring some initial pain, the early warning signs suggest that his blunt approach could come with more ominous risks to the economy.

27 January
Trump tells Davos elite to invest in US or face tariffs
(AP) — President Donald Trump used an address Thursday to the World Economic Forum to promise global elites lower taxes if they bring manufacturing to the U.S. and threatened to impose tariffs if they don’t.
Speaking by video from the White House to the annual summit in Davos, Switzerland, on his third full day in office, Trump ran through his flurry of executive actions since his swearing-in and claimed that he had a “massive mandate” from the American people to bring change. He laid out a carrot-and-stick approach for private investment in the U.S.
“Come make your product in America and we will give you among the lowest taxes as any nation on earth,” Trump said. “But if you don’t make your product in America, which is your prerogative, then very simply, you will have to pay a tariff — differing amounts — but a tariff, which will direct hundreds of billions of dollars and even trillions of dollars into our treasury to strengthen our economy and pay down debt under the Trump administration.”
27 January
How Trump’s Anti-Globalism Could Backfire
Harold James
(Project Syndicate) America’s heavy dependence on global capital is potentially a big vulnerability. If foreign inflows were to dry up in response to new tariffs, corporate tax policies, a strong dollar, or other policy decisions, Americans would have to consume less, which would be experienced as a decline in their standard of living.
While US President Donald Trump has left no doubt about his love of tariffs, the world is still waiting to see precisely what he will do. He has named China, Canada, and Mexico as his first targets, but it remains to be seen whether he wants a grand slam, or more conditional measures linked to other policy issues (such as acquiring TikTok). For now, the only certainty is that his administration will use tariffs to extract concessions where it can.
The issue is complicated, though, because tariffs interact closely with other components of economic policy such as the exchange rate. In theory, higher tariffs should reduce import demand and push up the exchange rate, ultimately making foreign goods cheaper again. This is why Trump previously claimed that tariffs do not actually cost Americans anything, on the grounds that it is America’s trade partners who pay.

20 January
Economists’ Way Out of the Wilderness
by James K. Galbraith
(Project Syndicate) Monopoly is a powerful thing, particularly where economic ideas are concerned. If economists are to solve the problems that people care about, they must stop treating production as an afterthought and accept – as all other natural and social sciences have – that theories of equilibrium are a comforting nineteenth-century relic.
In a remarkable catalogue of horrors for The New York Times, journalist Ben Casselman details the “central tenets” of mainstream economics that have fallen out of political favor: free trade, open borders, a carbon tax, fiscal austerity. Covering the American Economic Association’s recent annual meeting in San Francisco, Casselman notes the problems that economists have not solved: deindustrialization, the 2008 crash and ensuing recession, the long-term growth slowdown. And he highlights their biggest forecasting failures: the 2007-09 financial crisis, the 2021-22 price shock, and the transitory nature of the resulting inflation, which has so far receded without triggering a recession.

3 January
The Economic Consequences of Trump 2.0
by Simon Johnson
(Project Syndicate) The US president-elect’s signature policies will do almost nothing positive for less educated Americans or significantly improve the lives of most others. The rich will get richer, the richest will get a lot richer, and everyone else will contend with higher inflation, cuts to public services, and the effects of runaway deregulation.
US President-elect Donald Trump’s second administration starts at noon on January 20. Trump’s non-stop election campaign since losing to Joe Biden in 2020 suggests a better organized redo of his first term, with the same focus on tax cuts to boost the economy, higher tariffs to reshape US trade with the world, and deporting as many immigrants as possible to generate more opportunities for American workers. But times have changed, and reality is unlikely to match rhetoric.

2 January
The Economist: Our first cover of 2025 looks at the fight over America’s economy. Donald Trump’s raucous court of economic advisers includes people who are anti-trade, anti-immigration and anti-regulation, as well as more traditional low-tax, small-government enthusiasts. And a new faction has come to Washington: the tech bros from Silicon Valley.
This is a volatile mix. The tech crew includes Elon Musk, of course, but also others such as David Sacks, a venture capitalist who has been appointed Mr Trump’s crypto and artificial-intelligence czar.
Tech sees all of the government as something to influence and disrupt. This could bring benefits for America—but tech’s forward-looking ethos will create friction with the MAGA movement, which hopes to restore a vision of a largely imaginary past. Those two factions are already clashing over immigration. Mr Trump, who craves conflict and outrage, is unlikely to settle their differences. A combination of infighting, botched implementation and self-dealing could hobble Mr Trump’s second term. But our leader argues that disaster is not foreordained. The factions could end up curbing each other’s worst instincts. Out of Trumpian chaos and contradiction, something good might just emerge.

2024

31 December
Ozempic economics: How GLP-1s will disrupt the economy in 2025
Weight loss drugs are saving lives, shrinking waistlines and shaking up the economy.
With adult obesity rates falling last year for the first time in more than a decade, drugs such as Ozempic and Zepbound are already reshaping Americans’ waistlines. Now, they’re poised to reshape the entire economy, too.

25 November
Reviving the Gold Standard: Judy Shelton’s Proposal for a Gold-Convertible Treasury Bond
Gold prices are significantly down on Monday morning. As the U.S. enters a shortened trading week due to the Thanksgiving holiday, the general market sentiment appears more optimistic, which is unfavorable for precious metals typically seen as safe-haven assets. This improved risk appetite can be partially attributed to President-elect Trump’s selection of hedge fund manager Scott Bessent for the position of Treasury Secretary. The appointment of a financial industry insider to this key economic role has seemingly boosted investor confidence in the incoming administration’s economic policies. The price of gold is trading at $2642.39, down $73.80. The price of silver is trading at $30.39, down 95 cents.
Judy Shelton, a long-time advocate for sound money, has proposed an innovative approach to reintroduce a gold standard for the US dollar. Her plan involves issuing a 50-year Treasury bond that would be convertible into gold, potentially to be initiated by President Trump on July 4, 2026. This proposal aims to address the current monetary system’s shortcomings and restore stability to the dollar by tying it back to a tangible asset.
Judy Shelton: “Why Don’t We Use Our Gold As Collateral For A New Treasury Debt Instrument”

21 November
Elon Musk’s $2 Trillion Fiscal Fantasy
Jeffrey Frankel
It is often said that a businessman like Donald Trump or Elon Musk will know how to put America’s fiscal house in order. But between Trump’s planned tax cuts and Musk’s absurd estimate of how much federal spending can be reduced, the smart money says they have no idea what they are doing.
(Project Syndicate) When the US presidential election was called for Donald Trump, the yield on ten-year US government bonds increased from 4.3% to 4.4%, and the 30-year-bond yield rose from 4.5% to 4.6%, with both remaining at those levels ten days later. As the bond market declined – higher yields mean lower prices – the stock market rose. Clearly, investors expect the next Trump administration to produce higher government budget deficits and more debt.
During Trump’s first term in office, he added $8 trillion to the national debt – all previous presidents combined had accumulated $20 trillion – despite having promised to run budget surpluses so large that they would eliminate the national debt within two terms. In the campaign, he vowed to cut taxes for seemingly every group that caught his fancy. According to the Committee for a Responsible Federal Budget’s central estimate, Trump’s tax proposals imply $10 trillion in foregone revenue over the next ten years. Add to that an extra $1 trillion in interest accrued on the national debt, and the losses far exceed the $3 trillion in added revenue that would come from the sky-high tariffs that Trump has pledged to introduce. This will require the federal government to sell a lot of bonds – a practice that will keep their price low and interest rates high.
… Trump is continuing a 45-year tradition of Republican presidents making sweeping promises to cut government spending, which they claim will more than cover revenue losses from tax cuts. From Ronald Reagan to George W. Bush – and, of course, Trump – they have all failed spectacularly.
4 things to watch for in the corporate tax debates
William G. Gale and Kyle Pomerleau
(Brookings) With President Trump’s reelection and Republican control of both the Senate and House of Representatives, tax policy will be back in the news. A top priority for Republicans will be extending the individual income tax and estate tax provisions of the 2017 Tax Cuts and Jobs Act (TCJA), almost all of which expire at the end of 2025.
But corporate tax changes may not be far behind. Trump has proposed enacting a handful of new corporate tax cuts and some of the provisions enacted in 2017 may be reconsidered as well. Here are four things to look for in the upcoming debate over corporate taxation.

1 November
Paul Krugman: What the Weak Jobs Report Tells Us
The great Biden employment boom (16 million jobs added since he took office) took a breather last month, according to Friday morning’s report, with a gain of only 12,000 jobs and downward revisions to some earlier numbers. Much of the slowdown reflected special factors — Hurricane Helene and the Boeing strike. But job gains still fell short of most forecasts, even though the forecasters knew about these factors.
So what did we learn? Mostly that you shouldn’t pay much attention to monthly job numbers.

17 October
America Is Sleepwalking Into an Economic Storm
By Daron Acemoglu, professor at the Massachusetts Institute of Technology, received the Nobel in economic science this year.
(NYT) Inflation seems under control. The job market remains healthy. Wages, including at the bottom end of the scale, are rising. But this is just a lull. There is a storm approaching, and Americans are not prepared.
Barreling toward us are three epochal changes poised to reshape the U.S. economy in coming years: an aging population, the rise of artificial intelligence and the rewiring of the global economy.
There should be little surprise in this, since all these are evolving slowly in plain sight. What has not been fully understood is how these changes in combination are likely to transform the lives of working people in ways not seen since the late 1970s, when wage inequality surged and wages at the low end stagnated or even fell.
Together, if handled correctly, these challenges could remake work and deliver much higher productivity, wages and opportunities — something the computer revolution promised and never fulfilled. If we mismanage the moment, they could make good, well-paying jobs scarcer and the economy less dynamic. Our decisions over the next five to 10 years will determine which path we take.
Nobel Laureates Help Solve the Inequality Puzzle

How Trump’s Radical Tariff Plan Could Wreck Our Economy
Paul Krugman
Donald Trump has flip-flopped on many issues…But Trump’s desire for high tariffs has been consistent. In an interview on Tuesday at the Economic Club of Chicago, he said, “To me, the most beautiful word in the dictionary is ‘tariff.’” As president, he called himself “a Tariff Man.” In fact, he imposed substantial tariffs when in office. Those actions were, however, mild compared with the tariffs he is proposing now. He initially suggested a 10 percent tariff on all imports, but now he talks about tariffs as high as 20 percent. (In Chicago, he even mused about 50 percent.) He wants a 60 percent tariff on imports from China.
Most economists believe that this would be a terrible idea, and I share that view. I’m not a free-trade purist; I opposed the Obama administration’s proposed Trans-Pacific Partnership and have been generally supportive of the much tougher line the Biden-Harris administration has taken on trade.
But there’s a big difference between sophisticated, limited deviations from free trade and Trump’s desire to put what he called a “ring around the collar” of our economy.

4 October
Economic climate blows Harris’ way
(Politico Playbook) This morning, the Labor Department turned in a surging jobs report, showing that employers added 254,000 jobs in September, more than 100,000 above forecasts, offering the latest signal that the economy is powering ahead despite fears of a slowdown.
More details: The report showed that the jobless rate fell to 4.1%, while hourly wages grew at an annual pace of 4%. While the report far exceeded expectations, it’s in keeping with a so-called soft landing, where the economy avoids a recession, which everyone had hoped the Federal Reserve could achieve after it undertook one of the most aggressive series of rate hikes in its history in 2022 and 2023.
“The surprisingly solid jobs number puts Fed Chair JEROME POWELL on course to cut interest rates by a modest quarter of a point when the central bank holds its next meeting on Nov. 6-7.”
Now, pair this morning’s rosy numbers with the unexpectedly quick resolution to the dockworkers’ strike — which reopened ports and avoided a potentially catastrophic pre-holiday supply chain snarl — and Harris has real winds in her sails.
Dockworkers’ union suspends strike until Jan. 15 to allow time to negotiate new contract

18-19 September
(Bloomberg) Stocks soared to all-time highs on Thursday as Wall Street bet that the Federal Reserve will be able to help the US avoid a recession as it enters a new easing cycle. The S&P 500 climbed 1.7%, notching its 39th record in 2024 and extending this year’s surge to about 20%. Tech led the advance. The Nasdaq 100 added 2.6% and the Russell 2000 of small caps rose for a seventh straight session. Bitcoin jumped 5%. The Fed’s bold start to cutting interest rates and its determination not to fall behind the curve re-ignited hopes the central bank will be able to stick a soft landing. Data on Thursday showed a slide in jobless claims to the lowest since May, signaling the labor market remains healthy despite a slowdown in hiring. The fundamentals of the US economy are healthy and investors’ new focus is on how fast the Fed will slash rates.
The Federal Reserve cut interest rates for the first time in years as inflation keeps cooling
The central bank voted for a more aggressive cut, citing progress on inflation and risks to employment
By Rocio Fabbro
(Quartz) The Federal Open Market Committee voted Wednesday to lower interest rates by 50 basis points, bringing the federal funds rate down from two-decade highs after more than a year of watching and waiting.
Chair Jerome Powell said in a press conference following the announcement that the half-point cut will help the Fed continue to balance the decreased risk from inflation and increased risk stemming from the unemployment rate, which has been trending upwards.
“This recalibration of our policy stance will help maintain the strength of the economy and the labor market, and will continue to enable further progress on inflation as we begin the process of moving toward a more neutral stance,” Powell said.

8 September
Harris reveals her own economic vision: It’s not Bidenomics.
By Jennifer Rubin
Kamala Harris, in forging her economic policies, shows she’s a daughter of Silicon Valley, not Scranton.
(WaPo) … For starters, she has defined her economic philosophy by what she is not proposing. She fully supports the Affordable Care Act, eschewing more progressive plans for Medicare-for-all. (Her stint in the vice presidency informed her belief that the latter was unnecessary; expansive and affordable coverage, if properly administered, is more than sufficient to move toward universal coverage.)
Likewise, huge investments and incentives in green energy make a fracking ban unnecessary. “My values have not changed,” she explained in a recent CNN interview, pointing to the achievements in the Inflation Reduction Act. “What we’ve already done creating over 300,000 new clean energy jobs. That tells me from my experience as vice president we can do it without banning fracking.”
In addition, her plans to lower food and housing costs do not include extreme measures such as price controls. To the disappointment of critics ready to pounce on her for potentially disastrous efforts to micromanage pricing, she shied away from such measures. Rather, she is determined to prevent anti-competitive prices that distort the market to the detriment of ordinary Americans.
Moreover, Harris promised in the housing market to cut red tape that slows development and to give tax breaks. CNN reported: “To spur construction, Harris would provide a first-ever tax incentive for builders who build starter homes sold to first-time buyers. She also would expand an existing tax incentive for building affordable rental housing and create a $40 billion fund for innovative housing construction.”
On tax policy, her proposal for capital gains tax increases would be a much more modest step than Biden’s, who pushed for equalizing the rate between capital gains and ordinary income.

26 August
Paul Krugman: Inflation Is Fading, Statistically and Politically
… there was another important speech on Friday: Federal Reserve Chair Jerome Powell’s talk at Jackson Hole, Wyo.
Yes, Powell’s remarks were of particular interest to investors looking for clues about future monetary policy. But even though his speech was rigorously apolitical, it had important political implications. For what we’re seeing, I’d argue, is inflation fading away — not just in the data, but also as a political issue. And that, of course, is very good news for Democrats.
About Powell’s speech: He noted that the inflation rate has declined a lot since it peaked in 2022 and expressed confidence that it’s on track to reach the Fed’s target of 2 percent — and why it’s getting there without the mass unemployment some economists had claimed would be necessary. Falling inflation all but guarantees that the Fed will cut interest rates at its Open Market committee meeting next month, although the size of the anticipated cut is uncertain.
What has brought inflation down? Like many economists, myself included, Powell believes that inflation was largely caused by “pandemic-related distortions” and that “the unwinding of these factors took much longer than expected but ultimately played a large role in the subsequent disinflation.”

22-24 August
All eyes on the annual Jackson Hole Economic Symposium
(Quartz) This year’s Jackson Hole theme is “Reassessing the Effectiveness and Transmission of Monetary Policy.”
23 August
Powell Speaks the Words and Restores Order on Wall Street
(Bloomberg)  … “The time has come for policy to adjust,”  Fed Chair Jerome Powell said in a speech during the annual economic conference in Jackson Hole, Wyoming. “The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook and the balance of risks.” His most decisive signal yet that his inflation-fighting mission has been accomplished helped restore order to markets just a few weeks after weaker-than-expected labor data, among other things, triggered a mini-panic. Now the return to calm is creating new riches on Wall Street. The S&P 500 climbed within 1% of an all-time high Friday. Exchange-traded funds tracking Treasuries and corporate bonds shot up. And the VIX index, Wall Street’s fear gauge, settled comfortably below levels denoting nervousness.
Fed chair Powell: ‘The time has come’ for interest rate cuts
The Federal Reserve is ready to cut interest rates, confident that inflation is easing to normal levels and wary of any more slowing in the job market.
(WaPo) “The time has come for policy to adjust,” Fed Chair Jerome H. Powell said Friday, in his most anticipated speech of the year. “The direction of travel is clear.”
After years of fighting dangerously high inflation, Powell, in his speech at the Jackson Hole Economic Symposium, shifted notably toward the job market, which he said “has cooled considerably.” Officials have been able to justify keeping rates at the highest level in more than 20 years, in part because they weren’t seeing consequences for workers.
Now, the balance of risks has shifted from rising prices to a weakening labor market — cementing the case for rate cuts.

22-23 August
Can Harris’s ‘opportunity economy’ win back ‘Bidenomics’ doubters?
Nicholas Sargen
The proposed measures in her “Opportunity Economy” program are aimed at tackling high grocery bills, the cost of raising a family and home affordability. They include targeting companies that make “excessive “ profits on food and groceries, lowering the cost of expensive medications, increasing the child tax credit for middle-class and low-income families and creating tax incentives to encourage new home construction and subsidize first-time home buyers.
Harris Thankfully Inherits Biden’s Economy in North Carolina
The vice president has essentially closed the gap with Donald Trump in this critical state, where jobs are being created by the thousands.
By Matthew A. Winkler, editor in chief emeritus of Bloomberg News
… Now that she is the Democratic Party’s standard bearer, Harris, like Biden, wants to protect Americans from Trump and his enablers calling for tariffs on foreign-made goods by making the cost of living, especially housing, more affordable. Her policies are an extension of the American Rescue Plan Act of 2021 that sparked the labor market recovery to the longest period of low unemployment since the 1960s; the Infrastructure Investment and Jobs Act of 2021 that paved the way for road and bridge building; the Chips and Science Act of 2022 subsidizing the manufacturing of semiconductors inside the US; and 2022’s IRA (Harris cast the deciding vote) that includes financing for clean energy projects promising to create even more jobs.

20 August
The US Treasury’s Backdoor Stimulus Is Hampering the Fed
Nouriel Roubini and Stephen Miran
(Project Syndicate) The US Federal Reserve has moved mountains to control inflation, which in July fell below 3% for the first time since 2021. Unfortunately, the Fed finds itself working at cross purposes with the US Treasury, whose debt-issuance strategy has been providing backdoor interest-rate cuts, keeping inflation above the Fed’s target range.

15-16 August
Harris has proposed a slew of economic policies. Here’s a look at what’s in them
(AP) — Vice President Kamala Harris is out with a string of new economic proposals focused on food prices, taxes, housing and medical costs that she says will empower the middle class.
WATCH: Harris debuts economic proposals to lower costs for Americans
The plans constitute the first major policy proposals that Harris has released in the nearly four weeks since President Joe Biden bowed out of the race and endorsed his vice president.
Harris unveils economic agenda to combat soaring grocery and housing prices
(PBS) In her first major policy speech since becoming the Democratic presidential candidate, Vice President Kamala Harris laid out her vision for combatting rising prices, one of the biggest issues for voters in this year’s election and one that’s dogged the Biden-Harris administration
Brooks and Capehart on Harris’ economic policy proposals
David Brooks:
(PBS Newshour) …she has some good policies in this package. I think the child tax credit is a good thing. She wants to deregulate housing, so we can get more homes.
But the price gouging is just — well, Catherine Rampell, The Washington Post columnist and a “News Hour” contributor, said it’s impossible to exaggerate how bad this policy is. And I agree with that.
…price controls just create shortages. They create black markets. We have seen it happen in Venezuela. We have seen it happen in the Soviet Union. Price controls just don’t work.
What’s worse about that, first, it’s trying to address a problem that does not exist. Price — grocery prices, inflation has been less than 1 percent for the past year. It’s over. We had a surge, but it’s over. The problem does not exist.
But the real core problem is it expresses a level of economic illiteracy which is kind of surprising in a responsible Democratic candidate. …
That’s not why inflation surged. Inflation surged because we had a pandemic which screwed up supply chains and productivity. Then the Biden administration overstimulated the economy, too many dollars chasing too few goods. Obama administration official Larry Summers and Jason Furman said at the time, this is going to cause inflation.
Bloomberg: A flurry of data affirming US economic resilience has driven stocks to their best week this year, with dip buyers stepping in after a recent rout. Equities rose on Friday with the S&P 500 extending a seven-day rally to 6.8%—the best performance in such a span since October 2022. The stock market halted a streak of four weeks of losses that had been partially driven by concern the Federal Reserve wouldn’t reduce borrowing costs fast enough to keep from overshooting the economic runway. But new data this week put frightened investors to shame, showing ebbing inflation and a resilient consumer—hallmarks of the central bank’s goal of a soft landing
Harris unveils part of her emerging economic platform at North Carolina rally
Vice President Kamala Harris announced a sweeping set of economic proposals Friday meant to cut taxes and lower the cost of groceries, housing and other essentials for many Americans, declaring, “Look, the bills add up.”
(AP) During a speech in the battleground state of North Carolina, Harris said “building up the middle class will be a defining goal of my presidency” while promoting her plan for a federal ban on price gouging on food producers and grocers. She also proposed $25,000 in down payment assistance for certain first-time home buyers and tax incentives for builders of starter homes.
She stressed tax breaks for families, as well as middle- and lower-income people, and lower health insurance premiums through the Affordable Care Act.
Kamala Harris unveils populist policy agenda, with $6,000 credit for newborns
The vice president endorses government action on housing, groceries, medical debt, drugs and other issues.
(WaPo) Vice President Kamala Harris on Friday unveiled an aggressively populist economic agenda, providing the most detailed vision yet of her governing priorities since becoming the Democratic Party’s presidential nominee.
Ahead of Harris’s speech in North Carolina, her campaign announced her support for more than a dozen economic policies aimed at “lowering costs for American families,” including some that went beyond what President Joe Biden had promised.
The most striking proposals were for the elimination of medical debt for millions of Americans; the “first-ever” ban on price gouging for groceries and food; a cap on prescription drug costs; a $25,000 subsidy for first-time home buyers; and a child tax credit that would provide $6,000 per child to families for the first year of a baby’s life.

Biden, Harris say seniors will see lower prices for diabetes, heart medications
Thursday’s announcement followed a year-long effort by the Biden administration to negotiate with pharmaceutical companies over some of the priciest drugs used by older Americans.

14 August
Core US Inflation Eases a Fourth Month, Sealing Fed Rate Cut
(Bloomberg) US inflation fell below a crucial threshold as it nears the end of a long trip back from the catastrophic coronavirus pandemic and its economic aftermath. Wall Street dutifully rejoiced. Stocks rose after an inflation report further solidified bets the Federal Reserve will start cutting rates in September. The S&P 500 extended its advance into a fifth straight day, the longest winning streak in more than month. Most of its major groups gained, with financial, energy and tech shares leading the way.

8 August
The Swing-State Economic Realities Shaping the US Election
Battleground states in this year’s presidential race present a challenge for Kamala Harris and an opening for Donald Trump.
(Bloomberg) …the economy that matters most isn’t national: It’s in the seven swing states poised to decide the race.
That group is home to 61 million people and had a combined gross domestic product in 2023 of $4.4 trillion, an output rivaling Germany’s. And it’s showing some economic cracks that could prove a political obstacle for Vice President Kamala Harris, who will have to answer to voters for the record of President Joe Biden’s administration.
In the so-called Blue Wall industrial states — Michigan, Pennsylvania and Wisconsin — where the political stakes are now highest, the combined growth from 2019 to the end of 2023 was just a third of that seen outside swing states, once you adjust for inflation and population increases.
In Arizona, which has enjoyed strong real GDP per capita growth, inflation and soaring housing costs hit household budgets hard, much as they have in Nevada and North Carolina. Georgia has benefited from new investments in electric vehicle plants, but it’s also seen its growth diluted by a swell of new residents.
Those burdens help explain why Biden struggled to get his economic message to resonate in these critical states, even as the US unemployment rate sat near historic lows, inflation cooled, and the country’s recovery from the pandemic downturn became the envy of much of the world.
Democrats will court voters on a wide range of issues, including abortion and the future of US democracy, and Harris’ move to the top of the ticket has galvanized their base. But the mixed picture in swing states underscores a hard truth for the party: National data may point to a healthy US economy, but voters’ perceptions of it are heavily shaped by conditions on the ground where they live.

2-5 August
Robert Reich: Another Black Monday?
What really happened today on Wall Street
“Stock markets are crashing, jobs numbers are terrible, we are heading to World War III, and we have two of the most incompetent ‘leaders’ in history,” Trump bloviated this morning.
Rubbish. The United States is not facing imminent recession. The American economy is still growing. There is no reason to panic.
Trump and his lackeys would like an economic panic because nothing else they’ve thrown at Kamala Harris is working.
In truth, Fed chair Jerome Powell — who Trump first appointed in 2018 —should have begun cutting interest rates at the Fed’s last meeting rather than waiting until September.
The Fed’s current 5.3 percent prime rate is too high. The Fed’s goal of 2 percent inflation is too low.
But there’s no reason for the Fed to make an emergency rate cut right now. Doing so might be seen as a sign that the Fed is worried about the economy falling into recession, which itself could cause a panic.
The other variable affecting markets is the Middle East. The world is justifiably worried about that tinderbox — and Netanyahu’s insistence on holding power by escalating warfare.
… the stock market is not the real economy, anyway. The richest 1 percent of Americans own more than half of all the shares of stock owned by Americans. The richest 10 percent own over 90 percent.
The real economy consists of average working people. Their spending determines whether and how fast businesses hire more workers.
Lower-income people have been especially hurt by high interest rates — which have raised credit-card fees, car loans, mortgages, and rents.
Last Friday’s slower-than-usual jobs report for July provides evidence. Employment slowed in July because the paychecks of average working people aren’t going far enough to keep employers hiring.
One reason paychecks aren’t going far enough is that interest rates are still too high.

U.S. Stock Market Sees Biggest Daily Drop in Nearly 2 Years
(NYT) Stocks on Wall Street suffered their sharpest decline in nearly two years on Monday, tracking a global rout that came as investors zeroed in on signs of a slowing American economy.
Monday’s drop extended a sell-off that had begun last week, after the U.S. jobs report on Friday that showed significantly slower hiring, with unemployment rising to its highest level in nearly three years. This deepened fears that the world’s largest economy could be slowing sharply and that the Federal Reserve may have waited too long to cut interest rates.
U.S. stocks tumbled after markets, rattled by reports of a slowing American economy, recorded heavy declines in Asia and Europe.
The S&P 500 fell 3 percent, its worst day since September 2022. This drop brings the index down 8.5 percent from an all-time peak in July – but it’s still up 8.7 percent in 2024 overall.
Jolted by Soft Jobs Report, Stocks Tumble to End a Turbulent Week
The report on hiring in July added to worries about the economy. Stocks fell sharply, and Treasury yields declined in expectation of a Federal Reserve rate cut.

31 July
Fed’s Powell puts September rate cut on table as US inflation cools
Central bank leaves policy rate in 5.25%-5.50% range
Investors see Fed as ‘locked and loaded’ for September cut
Fed to hold next meeting seven weeks before U.S. elections
Powell says decision to be driven by data, not politics
(Reuters) – Federal Reserve Chair Jerome Powell said on Wednesday interest rates could be cut as soon as September if the U.S. economy follows its expected path, putting the central bank near the end of a more than two-year battle against inflation but square in the middle of the nation’s presidential election campaign.
… Republican lawmakers warned in a hearing with Powell in July that a rate cut at the Sept. 17-18 meeting, seven weeks before the U.S. elections, could be seen as a politicized move – highlighting progress on inflation and offering the mood-lifting promise of cheaper credit and home mortgages in the near future.
The Fed chief, in response to a question from a reporter on Wednesday, said the central bank’s only consideration was the state and direction of the economy and the progress of inflation back to its 2% annual target, not the political calendar or any party’s fortunes.

Heather Cox Richardson June 23, 2024
On Thursday, Moody’s Analytics, which evaluates risk, performance, and financial modeling, compared the economic promises of President Joe Biden and presumptive Republican nominee Donald Trump. Authors Mark Zandi, Brendan LaCerda, and Justin Begley concluded that while a second Biden presidency would see cooling inflation and continued economic growth of 2.1%, a Trump presidency would be an economic disaster.
Trump has promised to slash taxes on the wealthy, increase tariffs across the board, and deport at least 11 million immigrant workers. According to the analysts, these policies would trigger a recession by mid-2025. The economy would slow to an average growth of 1.3%. At the same time, tariffs and fewer immigrant workers would increase the costs of consumer goods. That inflation—reaching 3.6%—would result in 3.2 million fewer jobs and a higher unemployment rate.

10 April
Inflation is sticking around it seems. A key US price gauge topped forecasts for a third straight month thanks to rising rent and transportation costs. The so-called core consumer price index—which excludes food and energy—increased 0.4% from February. Paired with recent reports showing continued good news for American workers (labor market and economic activity remain strong), investors no longer see much chance that the Federal Reserve will start easing anytime soon. Wall Street on Wednesday responded accordingly. Forecasters have been waiting for a deceleration based on leading indicators, but progress has more or less stalled over the past nine months. “The sound you heard there was the door slamming on a June rate cut,” said David Kelly, JPMorgan Asset Management’s chief global strategist. “That’s gone.”

5 April
U.S. Job Growth Much Stronger Than Expected
Employers added 303,000 jobs in March, the 39th straight month of growth. The unemployment rate fell to 3.8 percent.
An earthquake … in the labor market
Paradoxically, one of the factors propping the economy up is also one of the top issues that has soured Americans on Biden: the surge of immigration, both legal and illegal, over the past couple of years. “Economists think that as immigration adds to the labor supply, job growth can remain strong without overheating the economy,” NYT’s Jeanna Smialek reports. High immigration might also help reduce deficits, Semafor’s Jordan Weissmann reports, and it helps explain why the U.S. has outstripped its peer countries in the post-pandemic recovery.
The upshot is another very strong outlook for the U.S. economy — and a boost for President Biden, who’s still working to yank Americans’ perceptions of the economy out of the gutter. Biden’s White House statement trumpeted “the milestone of 15 million jobs created since I took office.” It’s now looking likelier that the Fed has mostly achieved its soft landing of bringing down inflation without tanking the economy, and that we’ve “reached a healthy equilibrium in which a steady roll of commercial activity, growing employment and rising wages coexist,” NYT’s Talmon Joseph Smith reports.
“This report is like the macroeconomist’s Holy Grail,” one economist tells the AP.

31 March
Baltimore braces for economic hit amid fears port shuttered for months
Some fear business that shifts to other ports may go for good
With the shipping channel clogged with debris, the people and businesses who depend on the port for their living are in limbo. The docks will soon be clear of cargo, and no more will be arriving anytime soon. Logistics and freight companies as well as retail businesses are bracing for a lengthy interruption in port operations that could exact a steep financial toll.
… clearing the stricken vessel and ruined bridge will not be quick or easy. This temporary cargo halt could become one of the greatest blows to Baltimore’s maritime prosperity since the city emerged as a commercial gateway with the tobacco trade in the 1600s.
For the United States as a whole, the port closure will have “no significant effects” on economic growth or inflation, according to Capital Economics. But it is a cataclysm for the regional economy and for hopes of adding blue-collar jobs. Some freight and transport executives compared the situation to other epic disasters.

26-28 March
Economic impact of the Baltimore bridge collapse (podcast)
(Brookings) The wreckage of the bridge now sits in the channel that connects Baltimore Harbor to the Chesapeake Bay, effectively closing the Port of Baltimore. Here to talk about the impacts of that closure on our economy and prospects for rebuilding the bridge is Joe Kane, a fellow in Brookings Metro
An important aspect that a lot of people don’t talk about is Baltimore is actually, among East Coast ports, it’s the closest geographically to the Midwest. So, so even if some of that traffic is diverted to other East Coast ports—, Philly might be and then obviously, Port of New York, New Jersey—it doesn’t change the fact that Baltimore still has a strategic location in terms of our freight networks to reaching some of those inland destinations too. So, just because the vessel and container traffic might be shifting on the coast, doesn’t change the fact that truck traffic in particular has to go in different routes to inland. …that’s just something to bear in mind as obviously all this is unfolding in real time.

Rebuilding Baltimore’s Key Bridge will likely take years, experts say
Rebuilding the Francis Scott Key Bridge over the Patapsco River will probably take years and cost hundreds of millions of dollars, experts said. But the shipping channel from the Port of Baltimore, a major economic engine for the city, could be cleared in months.
Rep. David Trone (D-Md.), a member of the House Appropriations Committee, said lawmakers were exploring the use of “quick release” emergency relief funds to aid in the effort in partnership with Transportation Secretary Pete Buttigieg and the “urgent deployment of congressionally approved funding.”
Baltimore Bridge Disaster to Test Shock-Worn Supply Chains
(Bloomberg) The US economy has withstood a series of supply chain shocks over the past five years, none more sudden and visibly dramatic than the container ship that slammed early Tuesday into Baltimore’s Francis Scott Key Bridge, sending large spans of the nearly 50-year-old steel structure tumbling into the river below.
Watch for a change in the directional flow of goods. Flexport CEO Ryan Petersen said importers will likely want to send their cargoes through West Coast ports and move them on trains eastward to avoid any bottlenecks at East Coast ports. Many were doing so already to avoid potential disruptions involving East Coast dockworkers in contract negotiations this year.
Chris Rogers, head of supply chain research at S&P Global Market Intelligence, said “bridge reconstruction and cargo delays are likely to be extensive,” though the diversions should help soften the economic blow.
Baltimore Bridge Collapse Will Redirect Cargo Across the US
Expect logistics snarls, no major economic hit, analysts say
Ports along US East Coast stand ready to help absorb shock

12 March
Prices ticked higher in February, but there’s good news at the grocery store
CNN — Higher prices at the gas pump pushed up inflation more than expected in February, according to the latest Consumer Price Index from the Bureau of Labor Statistics.
However, inflation did slow in other key areas like food and housing, fueling a touch of positive news for the Federal Reserve and consumers alike.
higher gas prices, airfares and shelter costs helped propel inflation, though Americans got some relief at the supermarket: Overall grocery prices didn’t increase at all last month. Despite the slight disappointment of today’s report, which could reinforce the Fed’s caution around cutting interest rates, the overall inflation picture for this year remains the same: Experts think it will fall slowly if bumpily over the course of the year, ticking closer to the central bank’s 2% target.

27 February
Two Theories for Americans’ Dire Economic Outlook
A conversation with Rogé Karma about what economic measures fail to grasp
By Lora Kelley
(The Atlantic) … Rogé: There are two dominant theories about the current gap between economic sentiment and the economic fundamentals. Theory No. 1 has to do with what we’ve been talking about: prices. The idea here is that people have a different conception of inflation than many economists do, but over time, people will get used to higher prices, especially because the rate of inflation has come down a lot, and start feeling better about the economy.
The second theory is that maybe the things that are driving people’s perceptions of the economy have nothing to do with the economy at all. Maybe it has to do with other factors, like partisanship or media negativity, and therefore, no matter how much prices get better, we might not actually see consumer sentiment continuing to recover.
Lora: What role does political partisanship play in how people view the economy?
Rogé: It is obvious that we are living in a time of extreme political polarization and that basically everything that happens, we filter through our partisan lenses. Partisans on both sides report feeling suddenly much more negative about the economy when someone from the other party is president, and more positive about the economy when their own party is in office;
… A lot of the reason we might see sentiment not recovering to where it was during the Trump years is because Republicans aren’t going to admit the economy is good, no matter how much better it gets. At the same time, it is curious that Democratic consumer sentiment is still well below the later Obama years. Over the past decade, we’ve seen a real shift in how Democrats think about the economy. The idea that the economy is rigged, that capitalism is a broken economic system, has become central to how progressives think, particularly younger Democrats.

22 February
David Brooks: The Political Failure of Bidenomics
…in 2020 the Democrats did something sensible. For the first time in 36 years, they nominated a presidential candidate who did not have a degree from Harvard or Yale. Joe Biden won the White House and immediately pursued an ambitious agenda to support the working class.
The economic results have been fantastic. During Biden’s term, the U.S. economy has created 10.8 million production and nonsupervisory jobs, including nearly 800,000 manufacturing jobs and 774,000 construction jobs. Wages are rising faster for people at the lower end of the wage scale than for people at the higher end.
A study [Employment Impacts of New U.S. Clean Energy, Manufacturing, and Infrastructure Laws] by the economist Robert Pollin and others estimated that 61 percent of the jobs created by the infrastructure law Biden championed wouldn’t require a college degree; the same applied for 58 percent of the jobs created by the Inflation Reduction Act and 44 percent of those created by the CHIPS act.
—Biden’s economic policies have done little to help the Democratic Party politically. In fact, the party continues to lose working-class support.
—Some of the loss of support is happening among some of the party’s historically most loyal constituencies.
—the diploma divide is still widening. Those with postgraduate degrees are increasingly turning Democratic; those without college degrees are increasingly Republican.
Franklin Roosevelt built the New Deal majorities by using government to support workers. Biden has tried to do the same. While his policies have worked economically, they have not worked politically. What’s going on?
The fact is that over the past few decades and across Western democracies, we’ve been in the middle of a seismic political realignment — with more-educated voters swinging left and less-educated voters swinging right. This realignment is more about culture and identity than it is about economics.
College-educated voters have tended to congregate in big cities and lead very different lives from voters without a college degree. College-educated voters are also much more likely to focus their attention on cultural issues like abortion and L.G.B.T.Q. rights, and they are much more socially liberal than non-college-educated voters. …
Trudeau, Biden and the ‘joyless prosperity’ challenge
(GZERO North) “On paper, both economically and legislatively, Joe Biden has been a very successful president,” says pollster Nik Nanos, of Nanos Research. “But the thing is that the polarization, the exceptional polarization that we’re seeing in the United States, there’s nothing that he can do.”
Voters remain unconvinced
US inflation numbers in January were slightly higher than expected, but other economic measures are between good and great. Consumer confidence has reached its highest level since December 2021, and GDP and employment numbers are strong. Still, only 33% of voters approve of Biden’s handling of the economy, and his approval rating is negative.
Republicans can’t be convinced that Biden’s economic policies are working. Researchers at Stanford University have found [Asymmetric amplification and the consumer sentiment gap] that Republicans are two and half times more partisan in their view of the economy than Democrats, meaning they think times are good when a Republican is in the White House and bad when the president is a Democrat. But the researchers’ models show that even partisan bias doesn’t explain all of the current negativity.
What’s new is social media, which amplifies negative messages and convinces people of things that aren’t true. Voters are entitled to be grumpy about cost-of-living increases, but many think things are much worse than they are.

16 February
Liberals Dreamed of This EBidenomicsconomy For Decades. What If Voters Don’t Like It?
Victoria Guida
Policymakers were determined to avoid the mistakes of the Great Recession — and they succeeded. But now they are in a mood of “fear and introspection.”
This is the future liberals wanted.
For years, economic thinkers on the left pushed for more government spending and urged the Federal Reserve to be less paranoid about inflation, with the goal of driving down unemployment as low as possible
Their logic: Workers would have more leverage to demand higher wages, as employers competed for employees. With higher incomes, people would be able to spend more, which would fuel the economy by creating demand for goods and services. It could also yield higher productivity, as companies invested in technology to better meet demand.
Higher wages, higher growth, higher productivity. Win-win-win.
There’s a chance we’re headed down that exact path, and yet, Americans don’t seem very enthused.
Because they really hate inflation.
For the coalition that has supported this agenda — Democrats to the left of Larry Summers, along with economists representing a range of ideologies — the economy today is a policy success more than a decade in the making. And the fact that it hasn’t yet translated into political success is a worrying challenge for them and President Joe Biden.
Rather than enjoying a victory lap, the people who oversaw this recovery — in the administration, the Fed, Congress and the worlds of academia and economic think tanks — are being asked to explain the disconnect between the economic data and the polling.

13 February
Strategic sector investments are poised to benefit distressed US counties
Joseph Parilla, Glencora Haskins, Lily Bermel, Lisa Hansmann, Mark Muro, Ryan Cummings, and Brian Deese
(Brookings)
Spurred in part by three significant pieces of federal legislation, since 2021, the United States has experienced an investment surge in “strategic sectors,” defined as clean energy, semiconductors and electronics, biomanufacturing, and other advanced industries.
So far, economically distressed counties are receiving a larger-than-proportional share of that investment surge relative to their current share of the economy. With comparatively low prime-age employment rates and median household incomes, these counties account for about 8% of national GDP but have received 16% of announced strategic sector investments since 2021.

Heather Cox Richardson: February 1, 2024
One of the biggest stories of 2023 is that the U.S. economy grew faster than any other economy in the Group of 7 nations, made up of democratic countries with the world’s largest advanced economies. By a lot. The International Monetary Fund yesterday reported that the U.S. gross domestic product—the way countries estimate their productivity—grew by 2.5%, significantly higher than the GDP of the next country on the list: Japan, at 1.9%.
IMF economists predict U.S. growth next year of 2.1%, again, higher than all the other G7 countries. The Federal Reserve Bank of Atlanta projects growth of 4.2% in the first quarter of 2024.
Every time I write about the booming economy, people accurately point out that these numbers don’t necessarily reflect the experiences of everyone. But they have enormous political implications.
President Joe Biden, Vice President Kamala Harris, Secretary of the Treasury Janet Yellen, and the Democrats embraced the idea that using the government to support ordinary Americans—those on the “demand” side of the economy—would nurture strong economic growth. Republicans have insisted since the 1980s that the way to expand the economy is the opposite: to invest in the “supply side,” investors who use their capital to build businesses.

Heather Cox Richardson: January 25, 2024
Today a report from the Bureau of Economic Analysis showed strong economic growth of 3.3% in the U.S. in the fourth quarter of 2023, setting growth for the year at 3.1% (by comparison, in the first three years of Trump’s term, before the pandemic, growth was 2.5%). A year ago, economists projected that the U.S. would have a recession in 2023, and forecast growth of 0.2%.
Meanwhile, unemployment remains low, wages are high, and inflation is receding. As Gabriel T. Rubin put it in the Wall Street Journal today, “The final three months of the year looked a lot like the soft landing Fed officials are seeking to achieve.”
There is a major political story behind this impressive economic one. Since 1981, lawmakers have insisted that cutting taxes, regulation, and the social safety net would create much faster and more efficient growth than was possible under the system in place between 1933 and 1981.
US Economy Booms Along Path to Soft Landing
(Bloomberg Evening Briefing) The US economy continued its seemingly unstoppable ascent out of the pandemic recession and its inflationary aftermath, further burying wrong calls of recession by posting fourth-quarter growth numbers that crushed forecasts. Cooling inflation has fueled consumer spending amid continued, near-record low unemployment and rising wages. The economy’s main growth engine—personal spending—rose at a 2.8% rate while business investment and housing also helped fuel the larger-than-expected advance. A closely watched measure of underlying inflation rose only 2% for a second straight quarter, in line with the Federal Reserve’s target and its plan for a soft landing. Meanwhile, Americans who have voiced negativity in the face of an economy that’s been firing on all thrusters may be finally coming around, as consumer sentiment begins to rise. Wall Street cheered.

14 January
Why are Americans so gloomy about their great economy?
Inflation, partisanship and the pandemic have made them glummer than the numbers suggest they should feel
(The Economist) Why are Americans so fed up with their economy? A year ago, a recession was widely expected. Instead the economy grows. Inflation is painful, but did not hit the heights that Europeans endured, for example. And the jobs market remains pretty strong. You might think people would be relieved, even happy, that their big economy continues to outperform most others. As our new article sets out today, however, things aren’t as simple as that.
“The vibes are off” is a phrase that does not usually appear in rigorous economic analysis but has cropped up again and again in serious discussions about America over the past year. From an array of hard data, there is reason to think that people ought to be quite satisfied about the state of the economy: inflation has slowed sharply, petrol prices are down, jobs are plentiful, incomes are rising and the stock market is strong. But survey after survey suggests that Americans are in fact quite unhappy. They think that the economy is in bad shape and that President Joe Biden is mismanaging it. What gives?
Start with the evidence of gloom. The figure watched most closely by economists for an idea of what people are feeling is a consumer-sentiment index from the University of Michigan. For the past two years it has bounced around at levels last seen during the global financial crisis of 2007-09. Even with an improvement in December, it is still 30% below its recent peak on the eve of the covid-19 crisis in early 2020.

13 January
The economy is improving under Biden. But many voters aren’t giving him credit.
(WaPo) By many measures, the U.S. economy is a great success story — recession fears have fallen, along with gas prices and the unemployment rate, while manufacturing construction is up along with nominal wages and the stock market. The United States has grown faster since covid-19 than any peer country. Gas prices, once averaging over $5 a gallon, are now approaching $3. The Federal Reserve projects three interest rate cuts in 2024 that could help buyers like Busby.
But the kitchen-table experience of Biden’s first term — a roller coaster of covid adjustment and international shocks — has meant that many voters have experienced the last few years as a time of relative economic hardship. Despite rising wages, voters as a group lost spending power during 2021 and 2022 and have only recently climbed out of the hole.

5-10  January
Why are Americans down on the economy despite its apparent strength?
Recent economic data indicate the U.S. is enjoying a robust jobs market, steady economic growth, and cooling inflation following the short recession owing to the COVID-19 pandemic. Yet, according to polling data, attitudes towards the economy are not improving and many households report a general dissatisfaction with the state of the economy. There seems to be a disconnect between the state of the economy and Americans’ sentiment, so what is causing the divide and why does it matter?
On January 10, the Economic Studies program at Brookings convened an event to discuss why Americans are down on the economy despite its apparent strength. Jason Furman, Harvard Kennedy School economics professor and former chair of the Council of Economic Advisers, opened the event. Following his framing remarks, Sara Eisen, CNBC’s “Squawk on the Street” and “Money Movers” co-anchor, moderated a conversation with University of Michigan economics professor and Brookings nonresident fellow Justin Wolfers, Wall Street Journal Chief Economics Commentator Greg Ip, and The Conference Board’s chief economist Dana Peterson.
Why are Americans so displeased with the economy?
Measuring whether economic news has become more negative
Ben Harris and Aaron Sojourner
(Brookings) The seeming disconnect between consumer sentiment and the state of the macroeconomy has been a defining characteristic of the post-COVID economy. By most widely accepted measures, the state of the macroeconomy is historically robust: The topline unemployment rate has remained below 4% for the past two years, economic growth has been steady and recovered pandemic-era losses, and inflation has retreated to historical norms.
This apparent strength notwithstanding, various measures of household and consumer sentiment suggest a persistent dissatisfaction with the state of the economy. Less than one-quarter of registered voters surveyed by the Wall Street Journal in August 2023 answered that the economy was headed in the right direction. The Michigan Index of Consumer Sentiment is roughly in-line with levels reported during the heart of the Great Recession in 2009, while the share of respondents in a Pew poll with a positive view of the economy was roughly halved between 2016 and today.
Explanations for the gap between sentiment and economic fundamentals
The disconnect between sentiment and macroeconomic performance has given rise to a host of plausible explanations. A subset of these explanations relates to dissatisfaction over the current state of the economy and future economic opportunities. This includes persistently elevated inequality, the higher level of prices owing to elevated post-pandemic inflation, a widespread lack of affordable housing, and a loss in faith about future economic prospects—including concern over the negative impact of artificial intelligence on quality jobs. Yet, this theory of dissatisfaction does not explain why, on the whole, the many positive elements of the macroeconomy do not seem to influence consumer sentiment as much as more limited negative elements.