Nicholas Eberstadt, Men Without Work

At Amazon, Nicholas Eberstadt, Men Without Work: Post-Pandemic Edition.

Washington Post: Americans 'Resigned' to Inflation, 'Feeling Better' About Dealing With It

 Yeah, I'm sure.

At AoSHQ, "Funflation!"

China's Economy Won’t Overtake the U.S., Some Now Predict

I've long been bearish on the China challenge. China has grown, dramatically, and the hype has grown right up along with it. All we can do is "prepare for the worst but hope for the best."

At WSJ, "Slowing growth has dampened expectations that the Chinese economy will be the world’s largest by the end of the decade":

HONG KONG—The sharp slowdown in China’s growth in the past year is prompting many experts to reconsider when China will surpass the U.S. as the world’s largest economy—or even if it ever will.

Until recently, many economists assumed China’s gross domestic product measured in U.S. dollars would surpass that of the U.S. by the end of the decade, capping what many consider to be the most extraordinary economic ascent ever.

But the outlook for China’s economy has darkened this year, as Beijing-led policies—including its zero tolerance for Covid-19 and efforts to rein in real-estate speculation—have sapped growth. As economists pare back their forecasts for 2022, they have become more worried about China’s longer term prospects, with unfavorable demographics and high debt levels potentially weighing on any rebound.

In one of the most recent revisions, the Centre for Economics and Business Research, a U.K. think tank, thinks China will overtake the U.S. as the world’s biggest economy two years later than it previously expected when it last made a forecast in 2020. It now thinks it will happen in 2030.

The Japan Center for Economic Research in Tokyo has said it thinks the passing of the baton won’t happen until 2033, four years later than its previous forecast.

Other economists question whether China will ever claim the top spot.

Former U.S. Treasury Secretary Lawrence Summers said China’s aging population and Beijing’s increasing tendency to intervene in corporate affairs, along with other challenges, have led him to substantially lower his expectations for Chinese growth.

He sees parallels between forecasts of China’s rise and earlier prognostications that Japan or Russia would overtake the U.S.—predictions that look ridiculous today, he said.

“I think there is a real possibility that something similar would happen with respect to China,” said Mr. Summers, now a Harvard University professor.

Researchers debate how meaningful GDP rankings are, and question whether much will change if China does overtake the U.S. The depth and openness of the U.S. economy mean the U.S. will still have outsize influence. The dollar is expected to remain the world’s reserve currency for years to come.

Size alone doesn’t reflect the quality of growth, said Leland Miller, chief executive officer of China Beige Book, a research firm. Living standards in the U.S., measured by per capita gross domestic product, are five times greater than in China, and the gap is unlikely to close soon.

Still, a change in the ranking would be a propaganda win for Beijing as it seeks to show the world—and its own population—that China’s state-led model is superior to Western liberal democracy, and that the U.S. is declining both politically and economically. Over time, it could lead to more-substantive changes as more countries reorient their economies to serve Chinese markets.

“If China slows down substantially in its growth, it impacts China’s capacity to project power,” said Mr. Summers.

How the two countries stack up economically matters to Chinese leaders: After the U.S. economy grew faster than China’s during the last quarter of 2021, Chinese President Xi Jinping told officials to ensure the country’s growth outpaces the U.S.’s this year, the Journal previously reported.

Economic fortunes can reverse quickly. In 2020, when China bounced back faster than the U.S. did from initial Covid-19 outbreaks, it looked like China’s economy might surpass the U.S. sooner than expected.

Some economists appear less perturbed by near-term threats to China’s growth. Justin Yifu Lin, a former chief economist at the World Bank who has long been bullish on China’s potential, argues its larger population means the country’s economy will wind up twice as big as the U.S.’s eventually. At a forum in Beijing in May, he predicted that process would continue despite the country’s latest slowdown.

Nevertheless, economic problems keep piling up in China, in part because of policy choices Beijing has made to contain Covid-19 and rein in debt.

The country’s real-estate slowdown is showing no signs of letting up. An index tracking consumer confidence plunged to its lowest level in decades in spring this year. Urban youth unemployment is at a record high.

The Lowy Institute, an Australian think tank, noted in a March report that it expects Chinese growth to average only about 2% to 3% a year between 2021 and 2050, compared with some researchers’ expectations that China could maintain 4% to 5% growth until midcentury. The institute cited unfavorable demographics, diminishing returns from infrastructure investments and other challenges.

With growth of 2% to 3% a year, China could still become the world’s largest economy, the institute noted.

“But it would never establish a meaningful lead over the United States and would remain far less prosperous and productive per person than America, even by mid-century,” it wrote. Its growth also wouldn’t be enough to give it any significant competitive advantage.

In a response to questions, the Lowy Institute said China’s further economic slowdown since the report came out has “at minimum pushed back the likely moment when China might overtake the U.S., and made it more likely that China might in fact never be able to do so.”

With China’s urban youth unemployment at a high, a job fair was held in Beijing last month.

Measured by purchasing power, which takes into account differing costs of goods and services across countries, China already overtook the U.S.’s economy in 2016, according to World Bank figures. Measured in U.S. dollar terms, however, China’s GDP was 77% of the size of the U.S’s. in 2021, up from 13% in 2001, data from the World Bank shows.

Capital Economics researchers wrote in a report early last year that their most likely scenario envisions China’s economy expanding to about 87% of the size of the U.S.’s in 2030, before dropping back to 81% in 2050. It blamed China’s shrinking working population and weak productivity growth, among other factors.

“A lot of people for a long time have overestimated the competence of China’s leadership and have been shocked by the missteps with Covid and the property sector,” wrote Mark Williams, the firm’s chief Asia economist, in an email in which he reaffirmed his firm’s forecast. “The weakness these crises have revealed have been present and growing for a long time.”

Some researchers say China’s ability to overtake the U.S. will depend on whether it pursues more economic policy changes...

 

Student Loan Plan Will Feed Inflation, Hurt Dems Politically

From Kim Strassel, at WSJ, "Student Debt Forgiveness Is Biden’s Bluto Moment":

His plan will feed inflation and hurt him politically.

If political moves received letter grades, Joe Biden’s student loan “forgiveness” mark might rank down there with the Deltas of “Animal House.” Think of it as the president’s Bluto moment.

In case the White House missed it, Democrats had recently been getting it together. After an 18-month food fight over the Biden agenda, the party finally united to pass the Inflation Reduction Act. It suckered spend-happy Republicans into passing a semiconductor bill that vulnerable Democrats could brag about back home. The left has successfully fanned fears on abortion, putting GOP candidates on the back foot. And Donald Trump is in the headlines—right where they want him.

Then along comes Blutarsky, and seven years of college down the drain. It would be hard to fashion a program that carries more political risk for less political reward. In the name of paying off that powerful voting bloc known as “overeducated and underemployed deadbeats,” Mr. Biden is dumping on his own inflation message, dividing his party, and insulting any American who has ever worked, saved or paid a bill.

Inflation remains voters’ biggest worry, and they understand Washington’s role in feeding it. Only recently they watched General Motors and Ford hike the prices of electric vehicles by $6,000 to $8,500—roughly pacing the $7,500 tax credit the Biden “inflation reduction” law bestows. Cause, effect. Millions of American parents read Mr. Biden’s Wednesday loan announcement as news that they will be paying $10,000 more for tuition next year (and the year after that, and after that) as colleges reap the loan windfall.

Inflation remains voters’ biggest worry, and they understand Washington’s role in feeding it. Only recently they watched General Motors and Ford hike the prices of electric vehicles by $6,000 to $8,500—roughly pacing the $7,500 tax credit the Biden “inflation reduction” law bestows. Cause, effect. Millions of American parents read Mr. Biden’s Wednesday loan announcement as news that they will be paying $10,000 more for tuition next year (and the year after that, and after that) as colleges reap the loan windfall.

It won’t stop with college inflation, even Democratic economists warn. Every $20,000 of loan forgiveness is $20,000 the favored college forgiven can blow on urban loft refits or Hawaiian vacations. “Pouring roughly half [a] trillion dollars of gasoline on the inflationary fire that is already burning is reckless,” Jason Furman, the Obama administration’s top economist, tweeted. Americans already doubted Mr. Biden’s new climate and health law would do much to lower prices, but they’ll draw a direct line from the loan bailout to further price hikes. A CNBC poll says nearly 60% of Americans fear this handout will make inflation worse.

The plan rips a new fissure in the Democratic Party, as nonsuicidal members run for cover. Maine Rep. Jared Golden called loan forgiveness “out of touch.” New Hampshire Rep. Chris Pappas said this is “no way to make policy.” Nevada Sen. Catherine Cortez Masto and Colorado Sen. Michael Bennet noted that the plan doesn’t address the underlying problem of rising tuition. Ohio Rep. Tim Ryan, running for the Senate, said the forgiveness “sends the wrong message to the millions of Ohioans without a degree working just as hard to make ends meet.”

What unites these Democrats? Each is in a competitive race, and they clearly already see the potential to alienate large cross-sections of the American electorate. Sure, loan forgiveness may benefit up to 40 million people, and energize Gen Zers and some millennials to vote for the Democrats they were going to support anyway. What about the other 220 million voting-age Americans who are being asked to float the upper crust’s seminars on gender identity and social justice?

Democrats desperately need suburban voters this fall. Those would be the same suburban parents who are already furious over school closures and woke education, who scrimped and saved to pay through the nose for college, and who now look like chumps as they prepare to pay more. The CNBC poll finds that 65% of those 35 to 64—prime college-parent age—feel loans should be forgiven for no one or only for those in need (the Biden plan favors top earners). That share is even higher—78%—for those over 65.

Party leaders have fretted for years over how to handle Democrats’ cratering support among the working class. This is the answer? The loan handout is a thumb in the eye to every American who went to trade school, got an apprenticeship, took out private loans to start a small business, or simply went to work—and now must not only grind out a living and keep up with inflation but cover the poor financial decisions of the college elite...

 

'Quiet Quitting'? This Is Not Good

Young people are generally inclined towards slacking anyways, but post-lockdown/pandemic, the lackadaisical sloth cohort is downright indolent. 

At the Wall Street Journal, "If Your Co-Workers Are ‘Quiet Quitting,’ Here’s What That Means":

Not taking your job too seriously has a new name: quiet quitting.

The phrase is generating millions of views on TikTok as some young professionals reject the idea of going above and beyond in their careers, labeling their lesser enthusiasm a form of “quitting.” It isn’t about getting off the company payroll, these employees say. In fact, the idea is to stay on it—but focus your time on the things you do outside of the office.

The videos range from sincere ruminations on work-life balance to snarky jokes. Some set firm boundaries against overtime in favor of family. Others advocate coasting from 9-to-5, doing just enough to get by. Many want to untether their careers from their identities.

Of course, every generation enters the workforce and quickly realizes that having a job isn’t all fun and games. Navigating contemptible bosses and the petty indignities that have always been inflicted on the ranks of working stiffs has never been easy. And many people who say, when they’re young, that they don’t care about climbing the corporate ladder end up changing their minds.

The difference now is that this group has TikTok and hashtags to emote. And these 20-somethings joined the working world during the Covid-19 pandemic, with all of its dislocating effects, including blurred boundaries between work and life. Many workers say they feel they have power to push back in the current strong labor market. Recent data from Gallup shows employee engagement is declining.

Clayton Farris, 41 years old, said that when he recently heard about the new term circulating on social media he realized he’d already been doing it by refusing to let work worries rule over him the way they used to.

“The most interesting part about it is nothing’s changed,” he said in his TikTok video. “I still work just as hard. I still get just as much accomplished. I just don’t stress and internally rip myself to shreds.”

Across generations, U.S. employee engagement is falling, according to survey data from Gallup, but Gen Z and younger millennials, born in 1989 and after, reported the lowest engagement of all during the first quarter at 31%.

Jim Harter, chief scientist for Gallup’s workplace and well-being research, said workers’ descriptions of “quiet quitting” align with a large group of survey respondents that he classifies as “not engaged”—those who will show up to work and do the minimum required but not much else. More than half of workers surveyed by Gallup who were born after 1989—54%—fall into this category.

One factor Gallup uses to measure engagement is whether people feel their work has purpose. Younger employees report that they don’t feel that way, the data show. These are the people who are more likely to work passively and look out for themselves over their employers, Dr. Harter said.

Paige West, 24, said she stopped overextending herself at a former position as a transportation analyst in Washington, D.C., less than a year into the job. Work stress had gotten so intense that, she said, her hair was falling out and she couldn’t sleep. While looking for a new role, she no longer worked beyond 40 hours each week, didn’t sign up for extra training and stopped trying to socialize with colleagues.

“I took a step back and said, ‘I’m just going to work the hours I’m supposed to work, that I’m really getting paid to work,’” she said. “Besides that, I’m not going to go extra.”

Ms. West said that she found herself more engaged during meetings once she stopped trying so hard, and she received more positive feedback. She left the job last year and is now a full-time freelance virtual assistant making about 75% of her previous salary. She adjusted by moving back to her home state of Florida.

Zaid Khan, a 24-year-old engineer in New York, posted a quiet quitting video that has racked up three million views in two weeks. In his viral TikTok, Mr. Khan explained the concept this way: “You’re quitting the idea of going above and beyond.”

“You’re no longer subscribing to the hustle-culture mentality that work has to be your life,” he said.

Mr. Khan says he and many of his peers reject the idea that productivity trumps all; they don’t see the payoff.

Some online commenters pledged to relax on social media when they had downtime at work. Others say they will follow their job descriptions to the letter, instead of asking for additional assignments.

A new crop of quiet-quitting videos is starting to pop up, denouncing the move as a cop-out, not a cure-all for burnout or discontentment at work.

People who coast have been fixtures of the office for decades, but many of today’s less-invested employees have been able to skate by thanks to remote work, said Elise Freedman, a senior client partner at consulting firm Korn Ferry.

If the economy sours, Ms. Freedman said, less-engaged workers may be more at risk of layoffs. “It’s perfectly appropriate that we expect our employees to give their all,” she said...

Workers showing up and doing the *absolute* minimum fucks up everyone else on the job. Lowering stress is fine, but if people are just skating all day for a paycheck, being personal totally checked out and completely disengaged from their required tasks, that's no good.

My son notes, on top of that, there's not enough workers on the job in the first place. Nobody wants to work anymore, or barely so. Employers can't find enough employees. Those who do want to do well have no support and end up schlupping extra hard for the same base pay. 

Fuck this youth generation. We're doomed.

Gallup: Poor Life Ratings Reach Record High

We're in a Carteresque malaise.

The chart below tells a lot. 

Life evaluations dropped to 46.4 of Americans as "thriving" during the Great (Crash) Recession of November 2008, and during late 2020, during a coronavirus pandemic, in December of that year.

See, "In U.S., Poor Life Ratings Reach Record High":

WASHINGTON, D.C. -- The percentage of Americans who evaluate their lives poorly enough to be considered "suffering" on Gallup's Life Evaluation Index was 5.6% in July, the highest since the index's inception in 2008. This exceeds the previous high of 4.8% measured in April and is statistically higher than all prior estimates in the COVID-19 era. Across extensive measurement since January 2008, the suffering percentage has reached 4.5% or higher on a handful of occasions.

The most recent results, obtained July 26 to Aug. 2, 2022, are based on web surveys of 3,649 U.S. adults as a part of the Gallup Panel, a probability-based, non-opt-in panel of about 115,000 adults across all 50 states and the District of Columbia.

For its Life Evaluation Index, Gallup classifies Americans as "thriving," "struggling" or "suffering," according to how they rate their current and future lives on a ladder scale with steps numbered from 0 to 10, based on the Cantril Self-Anchoring Striving Scale. Those who rate both their current and future lives a 4 or lower are classified as suffering. Those who rate their current life a 7 or higher and their anticipated life in five years an 8 or higher are classified as thriving.

The percentage of U.S. adults estimated to be thriving has steadily declined since it reached a record high of 59.2% in June 2021. The latest estimate of 51.2% is an 18-month low. The lowest recorded thriving rate of 46.4% was measured twice -- first, in November 2008 amid the Great Recession, and second, in late April 2020, during the initial economic shutdown associated with the outbreak of COVID-19 in the U.S...

 People are stressing. It's sad. 

Still more.

The Left's Assault on the Middle Class (VIDEO)

Here's Batya Ungar-Sargon, author of, Bad News: How Woke Media Is Undermining Democracy, for the Rising on the Hill TV: 

Can the Biden Presidency Be Saved?

From Andrew Sullivan, "If he can sustain the deal-making, why not?":

Now we’re talking.

The entire promise and rationale of a Biden presidency was not, I hate to break it to my lefty friends, a total transformation of the country in favor of green energy and “social justice.” It was a return to constitutional normalcy, and the kind of legislative deal-making that offers gradual progress on the biggest challenges of the day.

We wanted a better rollout of vaccines, competent economic management of the bust-and-boom cycle of the pandemic, progress on the urgent question of climate change, and responsibility again on the world stage. Biden gets a B on the first, a C- on the second, a B+ on climate, and a solid B in foreign policy.

That B+ on the climate depends of course on whether the Schumer-Manchin deal struck this week can get to the president’s desk. It looks like it can, if Senator Sinema doesn’t blow it up, and some geezers can recover from Covid quickly enough. And it represents what a Biden presidency promised to a center-right voter like me.

It’s an old-fashioned political deal between two Senators, with Biden on the sidelines. Manchin gets some goodies for the carbon industries in exchange for the biggest federal investment in clean energy ever. There’s a tax on the super-rich. There’s even some incentives for keeping nuclear plants alive. There’s a popular move to reduce Medicare drug prices; and more secure access to healthcare for the less privileged.

And this popularist package is branded as an inflation reduction measure! That’s a bit of a stretch, of course, but it may have a mild deflationary effect in a couple of years. The widely detested Larry Summers — see the Dishcast below — reassured Manchin on the inflationary impact this past week, and, as Chait details today, Summers has credibility on the issue after his sane and prescient warnings about inflation a year and a half ago. It comes after a bipartisan computer chips bill to better compete with China.

It’s not a New Green Deal; and it’s not socialized medicine. It’s what we used to call pragmatic progress...

 RELATED: At NYT, "Manchin, in Reversal, Agrees to Quick Action on Climate and Tax Plan."

Definition of a Recession

From Douglas Murray, at the New York Post, "Undocumented, underhoused chestfed kids are not in a recession, say Dems":

“We should avoid a semantic battle” said Janet Yellen yesterday. “A what?” In short it seems what the Treasury Secretary means is that we should not use the word “recession.”

That is a shame, because people, including Yellen’s boss, used to like to use the word a lot. In October 2020, when he was running for office, Joe Biden said “President Obama and I left Donald Trump a booming economy – and he caused a recession. He squandered it just like he has everything else he’s inherited in his life.” He said the same thing in September 2020, claiming that American was in a “recession created by Donald Trump’s negligence.”

Fast forward a couple of years and The White House is now reframing the meaning of the word and warning us all not to use it. It is true that until yesterday it was generally agreed that two straight quarters of negative GDP growth was the common definition of a recession. But yesterday President Biden said, “That doesn’t sound like a recession to me.” This fact should surprise no one.

Because re-naming things is one of the left’s favorite pastimes. If you cannot change the facts then you can at least change the language around the facts. By doing so you can massage the facts, make them less concerning and in the process wish reality away. For a time, at least...

Keep reading.

Escape From C.A.? Los Angeles and San Francisco Lead the Way (VIDEO)

I love my state but Democrats have destroyed it. It's tragic.

I can't leave. I'm locked down career-wise at my college, teaching until I retire. In a decade or so I'll be able to, though. I'll have plenty of time to consider my options. Nevada or Wyoming? Idaho or Tennessee? Florida or Texas?

Who knows? 

Maybe California will be red state by then, with California's plurality Hispanic population following South Texas's lead? Never say never. Stranger things have happened. 

But as you can see, people who are free to flee, leave. It's a thing and getting bigger.

At the Los Angeles Times, "California exodus continues, with L.A., San Francisco leading the way: ‘Why are we here?’":

After living in the Bay Area for nearly seven years, Hari Raghavan and his wife decided to leave for the East Coast late last year.

They were both working remotely and wanted to leave California because of the high cost of living and urban crime. So they made a list of potential relocation cities before choosing Miami for its sunny weather and what they perceived was a better sense of safety.

Raghavan said that their Oakland house had been broken into four times and that prior to the pandemic, his wife called him every day during her seven-minute walk home from the BART station because she felt safer with someone on the phone. After moving to Miami, Raghavan said they accidentally left their garage door open one day and were floored when they returned home and found nothing had been stolen.

“We moved to the Bay Area because we had to be there if you want to work in tech and start-ups, and now that that’s no longer a tether, we took a long hard look and said, ‘Wait, why are we here again?’ ” Raghavan said.

He said there wasn’t much draw in California’s quality of life, local or social policies, or cost of living. “That forced us to question where we actually wanted to live,” he said.

An acceleration of people leaving coastal California began during the first year of the pandemic. But new data show it continued even after lockdowns and other COVID restrictions eased.

California ranks second in the country for outbound moves — a phenomenon that has snowballed during the pandemic, according to a report from the Federal Reserve Bank of Chicago, which tracked data from moving company United Van Lines. Between 2018 and 2019, California had an outbound move rate of 56%. That rate rose to nearly 60% in 2020-21.

Citing changes in work-life balance, opportunities for remote work and more people deciding to quit their jobs, the report found that droves of Californians are leaving for states like Texas, Virginia, Washington and Florida. California lost more than 352,000 residents between April 2020 and January 2022, according to California Department of Finance statistics.

San Francisco and Los Angeles rank first and second in the country, respectively, for outbound moves as the cost of living and housing prices continue to balloon and homeowners flee to less expensive cities, according to a report from Redfin released this month.

Angelenos, in particular, are flocking to places like Phoenix, Las Vegas, San Diego, San Antonio and Dallas. The number of Los Angeles residents leaving the city jumped from around 33,000 in the second quarter of 2021 to nearly 41,000 in the same span of 2022, according to the report.

California has grappled with extremely high housing prices compared with other states, according to USC economics professor Matthew Kahn. Combined with the pandemic and the rise in remote work, privileged households relocated when they had the opportunity.

“People want to live here, but an unintended consequence of the state’s environmentalism is we’re not building enough housing in desirable downtown areas,” Kahn said. “That prices out middle-class people to the suburbs [and creates] long commutes. We don’t have road pricing to help the traffic congestion, and these headaches add up. So when you create the possibility of work from home, many of these people ... they say ‘enough’ and they move to a cheaper metropolitan area.”

Kahn also pointed out that urban crime, a growing unhoused population, public school quality and overall quality of life are driving out residents.

“In New York City, but also in San Francisco, there are all these fights about which kids get into which elite public schools,” he said. “The rich are always able to hide in their bubble, but if the middle class looks at this quality of life declining, that’s a push factor to leave.”

Redfin chief economist Daryl Fairweather cited a June report that tracked the change in spending power of a homebuyer on a $2,500 monthly budget. While 11.2% of homes in Los Angeles were affordable on that budget, using a 3% interest rate, that amount swelled to about 72% in Houston and about 50% in Phoenix.

“It’s really an affordability problem,” Fairweather said. “California for the longest time has prioritized single-family zoning, which makes it so people stay in their homes longer because their property taxes don’t reflect the true value. California is the epicenter of where the housing shortage is so people have no choice but to move elsewhere.”

While California experienced a major population boom in the late 20th century — reaching 37 million people by 2000 — it’s been losing residents since, with new growth lagging behind the rest of the country, according to the Public Policy Institute of California. The state’s population increased by 5.8% from 2010 to 2020, below the national growth rate of 6.8%, and resulting in the loss of a congressional seat in 2021 for the first time in the state’s history.

Although California has relied on immigration to offset its population decline for the past two decades, that flow has also shrunk, according to UCLA economics professor Lee Ohanian.

Delays in processing migration requests to the U.S. were compounded during the pandemic, resulting in the lowest levels of immigration in decades, according to U.S. Census Bureau data.

Estimates showed a net increase of 244,000 new immigrants between 2020 and 2021 — roughly half the 477,000 new immigrant residents recorded between 2019 and 2020 and a drastic reduction from more than 1 million reported from 2015 to 2016.

The state is also seeing a dwindling middle class...

The "middle class"? Ha! 

How about the Medieval class? The so-called middle class in California is now our postmodern neo-feudal peerage for the metaversal-future.

See Joel Kotkin, at City Journal (interview), "California’s Neo-Feudal Future."

White House Braces for Grim News on Economy (VIDEO)

Yes, the White House is "bracing" being attempting to redefine what a recession is. 

At Politico, "White House braces for grim news on economy":

Bracing for impact: Even if Thursday's GDP report shows a second consecutive quarter of negative growth, you won't hear the Biden admin using the R-word.

The Council of Economic Advisers is redefining what a recession is...🤔https://t.co/HHBYJKqP5V pic.twitter.com/gecR93vPPj

— Jacqui Heinrich (@JacquiHeinrich) July 24, 2022

Senior administration officials are hitting the airwaves and arm-twisting reporters in private, imploring anyone who will listen that the economy is still healthy.

The White House is scrambling behind the scenes and in public to get ahead of a potentially brutal economic punch to the face that could give Republicans the chance to declare that the “Biden recession” is under way.

Wall Street analysts, economists and even some in the Biden administration itself expect a report on Thursday to show the economy shrank for a second straight quarter, meeting a classic — though by no means the only — definition of a recession.

Senior administration officials are hitting the airwaves and arm-twisting reporters in private, imploring anyone who will listen that the economy — despised by majorities of both Republicans and Democrats fed up with inflation — is still healthy.

But White House officials admit that changing people’s minds is a daunting task as the highest inflation in four decades severely cuts into wages even as the economy continues to churn out jobs and Americans keep spending.

Economic Advisers and one of Biden’s longest-serving aides, said in an interview. “What we are trying to do is explain things in a much more nuanced way than most people are getting from the daily news flow.”

Bernstein’s CEA and the Treasury Department are cranking out blog posts and studies arguing that the current post-pandemic moment — while strange and disconcerting to many Americans — is nowhere close to a recession.

Treasury Secretary Janet Yellen showed up on NBC’s “Meet the Press” on Sunday and declared, “This is not an economy that is in recession.” On Monday, senior Biden aide Gene Sperling ventured into hostile territory on Fox News. The next day, National Economic Council Director Brian Deese joined the White House briefing to make the case.

Aides are even quietly praising occasional White House nemesis Larry Summers, the voluble former Treasury secretary who on Monday said on CNN that anyone who says we are in a recession now is “either ignorant” or “looking to make political points.” Summers still believes a recession is likely in the relatively near term.

Biden on Friday afternoon received a briefing from Yellen, Deese, Sperling, CEA Chair Cecilia Rouse, Energy Secretary Jennifer Granholm, Budget Director Shalanda Young and Amos Hochstein, coordinator of international energy policy at the State Department.

The lengthy, remote session focused on just how much gas prices are dropping (a White House fixation), the impact of that decline on consumers and continuing geopolitical issues — mainly the war in Ukraine — that could still send oil and gas prices soaring again.

White House press staff are also regularly convening background briefings with economics reporters and senior administration officials to talk up the economy’s strengths, no matter what the GDP numbers say this week.

For their part, Republican leaders sense an opportunity to leverage their already big advantage on the economy as a midterm election issue and ride it to even larger gains in November than polls predict...

 

'I Made A Huge Mistake Voting For Biden'

Ms. Zoe Nicholson from St. Louis:

Zoe, a Missouri resident: “I made a huge mistake voting for Biden.”

“I regret voting for him. I mean, it really was a terrible choice. " pic.twitter.com/EMki781Gu7

— RNC Research (@RNCResearch) July 11, 2022

J. David McSwane, Pandemic, Inc.

At Amazon, J. David McSwane, Pandemic, Inc.: Chasing the Capitalists and Thieves Who Got Rich While We Got Sick.

Americans Are Cutting Back This Fourth of July — What? Biden's America! We Don't Cutback on the Fourth or Any Other Day, and This Guy's Blaming Gas Stations

Out of touch in putting it mildly, on Twitter below.

Americans should be enjoy the blessings and bounties of the country today, not worrying whether they can afford a couple of pounds of ground beef. It's ridiculous.  

And at the Wall Street Journal, "Fourth of July Cookouts Attract Party Crasher: Rising Food Costs":

My message to the companies running gas stations and setting prices at the pump is simple: this is a time of war and global peril.

Bring down the price you are charging at the pump to reflect the cost you’re paying for the product. And do it now.

— President Biden (@POTUS) July 2, 2022

The average cost of a summer cookout rose 17% from last year, according to a survey, prompting some Americans to dial back their festivities.

As the price of food continues to climb with the Fourth of July approaching, Jayne Crucius had to decide whether she would grill her traditional beef tenderloin.

When Ms. Crucius saw that a five-pound beef tenderloin would set her back about $135, she decided to skip it. Instead, she’s serving chicken and pork ribs at a Fourth of July party at her cottage in Atkinson, N.H.

“We can eat a lot of chicken for that kind of money,” said Ms. Crucius, who is 74 years old.

Consumers across the U.S. are choosing between dialing back on their Independence Day celebrations or accepting the higher costs at the grocery store. The average cost of a summer cookout for 10 people this year is $69.68, a 17% increase from last year, according to a survey from the American Farm Bureau Federation, an advocacy group that represents farmers.

The rise hit most Fourth of July staples, including hamburgers, pork chops, potato salad and ice cream, according to the American Farm Bureau Federation. The price of ground beef is up 36%, vanilla ice cream jumped 10% The AFBF attributes the price increases to continuing supply-chain disruptions, inflation and the war in Ukraine. The supply-chain problems and inflation have also increased the costs of farm supplies, putting the squeeze on farmers, according to the federation.

Beer lovers are also going to pay more this year if they want to sip their lagers and ales while enjoying the fireworks. Beer prices are up nearly 25% for the year to date, according to an analysis by Wells Fargo, while wine prices have risen about 6%.

U.S. consumer inflation rose by 8.6% in May, its highest jump since December 1981, according to the Labor Department. Increases in energy prices and a nearly 12% rise in grocery costs drove May’s inflation jump, the department said.

There doesn’t appear to be any relief on the horizon for consumers. Some of the nation’s biggest food suppliers have said they would continue to raise prices as they face higher costs for labor, packaging, ingredients and transportation. The increase in fuel costs is also making it more expensive to produce and sell food.

Rising gas prices are hurting consumers too. With less disposable income, more shoppers are searching for ways to stretch their dollars.

Susan Doherty, who is semiretired and lives in Windham, N.H., said she and her husband are eating more chicken and pork for dinner because beef has gotten so expensive.

Ms. Doherty said she typically serves marinated sirloin steak tips for her Fourth of July party. But this year, she plans on buying fewer steak tips and will supplement the beef with marinated chicken, she said...

Markets Suffer Worst First Half of a Year in Decades

At the Wall Street Journal, "Investors gird for more volatility; almost everything—from stocks to bonds and crypto—falls to start 2022":

Global markets closed out their most bruising first half of a year in decades, leaving investors bracing for the prospect of further losses.

Accelerating inflation and rising interest rates fueled a monthslong rout that left few markets unscathed. The S&P 500 fell 21% through Thursday, suffering its worst first half of a year since 1970, according to Dow Jones Market Data. Investment-grade bonds, as measured by the iShares Core U.S. Aggregate Bond exchange-traded fund, lost 11%—posting their worst start to a year in history.

Stocks and bonds in emerging markets tumbled, hurt by slowing growth. And cryptocurrencies came crashing down, saddling individual investors and hedge funds alike with steep losses.

About the only thing that rose in the first half was commodities prices. Oil prices surged above $100 a barrel, and U.S. gas prices hit records after the Russia-Ukraine war upended imports from Russia, the world’s third-largest oil producer.

Now, investors seem to be in agreement about only one thing: More volatility is ahead. That is because central banks from the U.S. to India and New Zealand plan to keep raising interest rates to try to rein in inflation. The moves will likely slow down growth, potentially tipping economies into recession and generating further tumult across markets.

“That’s the biggest risk right now—inflation and the Fed,” said Katie Nixon, chief investment officer for Northern Trust Wealth Management.

Ms. Nixon said she would be keeping a close eye on economic data to gauge how much rising interest rates are weighing on growth over the next few months. Her firm has kept money in U.S. stocks, wagering the economy will slow down but avoid a recession. It has also put money into companies focused on natural resources, a bet that should pay off if inflation persists for longer than it expects.

“You don’t want to be whipsawed by the markets,” she said.

The good news for investors is that markets haven’t always done poorly after suffering big losses in the first half of the year. In fact, history shows they have often done the opposite.

When the S&P 500 has fallen at least 15% the first six months of the year, as it did in 1932, 1939, 1940, 1962 and 1970, it has risen an average of 24% in the second half, according to Dow Jones Market Data.

One reason markets have often snapped back after big pullbacks: Investors have eventually stepped in, wagering prices have fallen too far. Fund managers currently have larger-than-average cash positions, smaller-than-average equities positions and a markedly high degree of pessimism about the economy, Bank of America found in its June survey of investors. Those factors, among others, make markets look “painfully oversold”—and thus potentially ripe for a rally, the bank’s strategists said in a separate report.

But even those finding buying opportunities these days say they are focusing on specific companies, instead of buying broadly. They concede that the current economic environment—in which inflation is high, borrowing costs are rising and growth is expected to slow—makes it difficult to be enthusiastic about many parts of the market.

Economists surveyed by The Wall Street Journal in June said they saw a 44% probability of a recession in the U.S. in the next 12 months, compared with 18% in January.

History also has shown the Fed has seldom been able to pull off a “soft landing,” a scenario in which it slows the economy enough to rein in inflation but avoids tightening monetary policy to the point of causing a recession. The U.S. went into recession four of the last six times the Fed began raising interest rates, according to research from the Federal Reserve Bank of St. Louis that looked at monetary policy tightening cycles since the 1980s.

“The runway for the Fed to manage a soft landing is not only narrow but also winding and bumpy,” said Lauren Goodwin, economist and portfolio strategist at New York Life Investments...

Steve Forbes, et al., Inflation

At Amazon, Steve Forbes, et. al., Inflation: What It Is, Why It's Bad, and How to Fix It.

Energy Inflation Derails Biden's Climate Agenda

Well, I guess that's one good thing about inflation. 

At the Wall Street Journal, "Under the president’s watch, emissions have risen, renewable-energy development has slowed and oil and coal use is up":

WASHINGTON—President Biden came to office vowing to cut dependence on fossil fuels, putting environmentalists in charge of energy policy and asking Congress for billions of dollars to fund a transition to cleaner energy.

Seventeen months later, greenhouse gas emissions are up, renewable-power development has slowed, and oil and coal consumption are on the rise. The biggest aspects of the green agenda are stuck in Congress, while Mr. Biden, facing surging energy prices and inflation, urged U.S. oil refiners this week to expand capacity.

Domestic oil and gas production has increased since Mr. Biden came into office and is projected to rise to record highs, but that has just inflamed concerns from environmentalists that Mr. Biden is backing away from his green agenda.

“I thought the country had turned a corner,” said Mary Nichols, a former California regulator and longtime environmental leader, “that the country was headed in the right direction.”

“Now this last year or two leaves you wondering whether that is true,” Ms. Nichols said.

Mr. Biden reaffirmed his environmental commitments Friday at the Major Economies Forum on Energy and Climate, a virtual summit he hosted with representatives of more than 20 countries and international groups, including the European Commission and China.

“The critical point is that these actions are part of our transition to a clean and secure long-term energy future,” Mr. Biden said, adding later, “The science tells us that the window for action is rapidly narrowing.”

At home, however, Mr. Biden’s agenda has run into the reality of rising oil prices, punishing inflation and policy conflicts. Mr. Biden pledged last year to cut U.S. greenhouse gas emissions by 50% to 52% below 2005 levels by 2030. But doing so will require Congressional approval of measures such as tax incentives for clean energy, analysts say.

Coal-state Sen. Joe Manchin (D., W.Va.), who derailed Mr. Biden’s roughly $3.5 trillion climate and social spending bill last year, has been negotiating with Senate Majority Leader Chuck Schumer (D., N.Y.) on a new bill that would include the tax incentives, but a deal is far from certain.

The stakes for Mr. Biden are high. High inflation and record gasoline prices at the pump are a political liability heading into the midterm elections, where Republicans have a chance to seize majorities in the House and Senate.

At the same time, Mr. Biden risks losing support among young and progressive voters by seeming to back away from his green agenda, activists and political analysts said.

“It is hard to forever turn people out when you’re not producing results,” said Bill McKibben, an environmentalist and co-founder of 350.org, a group dedicated to stopping the use of fossil fuels world-wide. “Especially among young voters who care about this immensely there seems to be real signs it’s doing damage.”

Administration officials say they are still on course to meet their climate goals, citing measures including executive actions to reduce greenhouse-gas emissions, spending to build out an electric-vehicle charging network and the rejoining of international climate talks.

Mr. Biden wants clean energy “installed here, deployed here and exported from here,“ Energy Secretary Jennifer Granholm said. ”He has taken steps in every single aspect of that to make those things happen. It doesn’t happen overnight.”

Some of the problems bedeviling Mr. Biden were triggered by events beyond his control.

The economy’s sharp rebound from the pandemic fueled higher demand for energy, raising costs. Russian President Vladimir Putin’s invasion of Ukraine further taxed energy markets, leading Mr. Biden to label rising gas costs as “Putin’s price hike.”

Administration critics, however, say White House policy conflicts and political miscalculations made things worse as oil prices rose from roughly $53 a barrel when Mr. Biden took office to nearly $120 now.

One problem, these people say, was a too-rosy view of how smoothly the U.S. could move off fossil fuels. Mr. Biden used his first day in office to block completion of the Keystone XL oil pipeline and freeze new oil and gas leases on federal land.

“Unfortunately, what we have seen since January 2021 are policies that send a message that the administration aims to impose obstacles to our industry delivering energy resources the world needs,” Bill Turenne, a spokesman for Chevron Corp., said in a statement to reporters Wednesday.

Mr. Biden is now asking oil-and-gas companies to pump and export more in response to soaring prices and war in Europe, leaving him open to criticism from Republicans that his early decisions fed the problem and from environmentalists that he was backtracking on his climate agenda...

Why Aren't Democrats Dancing for Joy About Sky-High Gas Prices?

From Ed Driscoll, at Instapundit, "THE COUNTRY’S IN THE VERY BEST OF HANDS: Joe Biden Gets Smashed by Resurrected Clip, Karine-Jean Pierre Flails in Response."

It's a link-fest over there, with this hypersonic missile of truth on gas prices:

The Bear Market Descends

The fear is palpable.

At the Wall Street Journal, "Dow Drops Over 800 Points; S&P 500 Closes in Bear-Market Territory as Stocks Slide":

Investors raise bets on aggressive Federal Reserve interest-rate increases; cryptocurrencies decline.

The stock-market selloff deepened Monday, with the S&P 500 entering a bear market, as investors took another look at Friday’s red-hot inflation data and liked it even less.

Faced with rising chances of aggressive monetary tightening by the Federal Reserve, investors broadly unloaded risk. The S&P 500 slumped 3.9% as 495 of its 500 components ended the day lower. The declines left the U.S. stock benchmark down more than 20% from its January record, sending it into a bear market for the first time since 2020.

Meanwhile, a rout in cryptocurrencies highlighted investors’ increasing unwillingness to hang on to their most speculative holdings. The price of bitcoin plunged below $23,000 before paring that loss to trade at 5 p.m. ET down 66% from its November high.

The drop in cryptocurrencies accelerated Monday after interest-rate fears sparked a weekend selloff. Bitcoin, the biggest cryptocurrency, traded at 5 p.m. at $23,250.72, a drop of 15% from 24 hours earlier. Ethereum was down 16% from 24 hours earlier to about $1,243. Shares of Coinbase Global fell 11%, while Celsius Network said it was pausing all withdrawals, swaps between cryptocurrencies and transfers between accounts, citing “extreme market conditions.”

Even rare bets that have worked in 2022 stumbled Monday. The energy segment, the only one of the S&P 500’s 11 sectors in positive territory this year, fell 5.1%, a steeper decline than that of the broad index. The utilities group, the second-best performer in 2022, also lagged behind the market with a daily drop of 4.6%.

“We’re definitely seeing a risk-off atmosphere, a flight to quality,” said Charlie Ripley, senior investment strategist at Allianz Investment Management. “In that environment, people need to raise cash.”

The S&P 500 fell 151.23 points, or 3.9%, to 3749.63. The Dow Jones Industrial Average dropped 876.05 points, or 2.8%, to 30516.74. The tech-heavy Nasdaq Composite declined 530.80 points, or 4.7%, to 10809.23, off 33% from its November record.

Markets have swung wildly this year as investors scramble to decipher how rapidly the central bank will raise interest rates in an attempt to tame sky-high inflation. Rock-bottom rates and other stimulative policies helped keep the economy—as well as markets—afloat as the arrival of the Covid-19 pandemic idled businesses and threw people out of work.

Now, the Fed is trying to tame surging prices by unwinding that easy-money policy. The Fed will begin its latest two-day policy meeting Tuesday, and most investors believe that the central bank will announce Wednesday it is raising its benchmark interest rate by half a percentage point...

Still more.

 

'That Doesn't Feel Like $150 Worth of Groceries'

From Samuel Gregg, at Bari Weiss's Substack, "Why inflation is worse than you think."