NEW YORK (AP) — Most business economists think the U.S. economy could avoid a recession next year, even if the job market ends up weakening under the weight of high interest rates, according to a survey released Monday.
Only 24% of economists surveyed by the National Association for Business Economics said they see a recession in 2024 as more likely than not. The 38 surveyed economists come from such organizations as Morgan Stanley, the University of Arkansas and Nationwide.
Such predictions imply the belief that the Federal Reserve can pull off the delicate balancing act of slowing the economy just enough through high interest rates to get inflation under control, without snuffing out its growth completely.
…
High rates work to slow inflation by making borrowing more expensive and hurting prices for stocks and other investments. The combination typically slows spending and starves inflation of its fuel. So far, the job market has remained remarkably solid despite high interest rates, and the unemployment rate sat at a low 3.9% in October.
Well, according to the article:
Well, fuck.
And of course wages aren’t going to take a leap forward either.
Wages are growing on average, and faster than inflation (5.2% wage growth vs 3.2% inflation year over year for the past year). Takes two seconds to Google.
https://www.statista.com/statistics/1351276/wage-growth-vs-inflation-us/
Somewhat remarkably considering the problems with income inequality in the US, wages are growing the fastest of all among people with lower incomes (though all the wage increases in the world aren’t gonna tackle the problem of the power of the 0.1% investor class of wealth hoarders).
https://www.epi.org/publication/swa-wages-2022/
https://www.marketplace.org/2023/03/08/lower-income-earners-wages-have-grown-faster-than-others/
It’s pretty expected to given the persistent low unemployment and a high labor demand.
Not saying there’s no concerns at all in the entire economy or anything crazy. But you don’t have to spread disinformation like wages aren’t growing.
Disinformation?
I’ll offer this in return:
https://www.spokesman.com/stories/2023/sep/13/wages-are-finally-rising-faster-than-inflation-wil/
So let’s say wages are increasing faster than inflation. A couple articles I looked at said they just started to last quarter, so great, you might be right, but you’ve only been right for a very short while and the buying power that should go along with increasing wages won’t be felt until next year sometime.
Not disinformation, it’s accurate. Your article is accurate too, though lacks context and important details. Let me explain.
Wages outpaced inflation at the beginning of the pandemic, stopped being enough to compensate about May 2021, and started to again in January 2023. Though technically even earlier, because these are all year over year rates so it’s talking about the entire year summed up ending in January 2023, so in reality that threshold was crossed sometime in the year ending in January 2023. As the graph above showed.
If you’re talking about real wages/hr compensated for inflation fully recovering, it depends on your comparison point in time. I think December 2019, just before the pandemic started, makes the most sense as a comparison point. If that’s your starting point, real wages/hr are already higher.
Real wages in 1982-1984 dollars, December 2019: $10.96/hr https://www.bls.gov/news.release/archives/realer_01142020.pdf
The same for October 2023: $11.05/hr https://www.bls.gov/news.release/pdf/realer.pdf
Your article doesn’t state what it uses as the start point date. I’m guessing to get at that conclusion they must have picked a date already somewhat into the pandemic. I think this is misleading because there was a time at the start of pandemic inflation plummeted as people stopped spending money on many things, while wages continued to increase. If you consider the pandemic as a whole, wages have compensated for inflation. Purchasing power right now is greater than in December 2019. If you cherry pick somewhere in the middle of the pandemic, grabbing the point in time that inflation really started to tick up with the supply chain crisis but excluding the earlier wage increases that occurred during the pandemic, like let’s say April 2021 (well over a year into the pandemic), than we would still be below that time point.
April 2021: $11.31/hr https://www.bls.gov/news.release/archives/realer_05122021.pdf
I’m guessing that’s the time point your article must have picked, because at the current rate of wage increases over inflation we’ll equal that again ~February. But again, misleading year over year rates, so if we hit that on the official number reported in February it means in reality we crossed that point sometime during the previous year ending in February.
And another disclaimer, these wage gains are not even across the whole economy. As your article pointed out, hourly workers and low wage workers saw more of the increases. Some sectors like healthcare and social services saw less of them. So none of this is to imply anything about any particular individual, these are all very broad averages. And of course feel free to disagree with me on what comparison time points make the most sense to you. But I think the most important things in terms of inflation are that month to month inflation is currently pretty flat and back to normal (0.1% price increase in November 2023 from October 2023), and wage increases are continuing to outpace it, so purchasing power will continue to improve over time if these trends continue.
Just fyi, when the poster accused you of disinformation, it was a warning that they were about to push some disinformation.
Can’t wait to be told “actually sweetie Biden fixed inflation” even though nothing actually got better. It just stopped getting worse as fast.
How would you describe ‘fixed’ inflation?
Price decreases would be deflation, but fixing inflation is literally something like stopping/slowing the rate of increase.
Normal people only really care about their own purchasing power. We care about our wages relative to the price of necessities and luxuries. Until paychecks go as far as they used to before the pandemic, normal people won’t consider the problem fixed.
Real wages, wages controlled for inflation, expressed in 1982-1984 dollars, on average have surpassed where they were before the pandemic.
Real wages in October 2023: https://www.bls.gov/news.release/pdf/realer.pdf
Real wages in December 2019: https://stats.bls.gov/news.release/archives/realer_01142020.pdf
In October 2019 it was $10.96 /hr expressed in 1982-1984 dollars. In October 2023 it was $11.05 /hr in 1982-1984 dollars.
So yes, purchasing power restored. Of course this is an average. So while most people have had their purchasing power restored, if someone is in a industry like tech that got hit hard by interest rates, they may not have experienced this. The wage gains have also been more pronounced for people with lower incomes than with higher incomes. So people with higher incomes are less likely to have seen their full purchasing power restored.
But hey our economy was nowhere near perfect in 2019 before the pandemic either. Let’s make it better by shifting focus to income inequality, reversing disastrous tax cuts made by Trump, improving our housing supply shortages, trying to find ways to effectively get the investor class to pay their fair share, etc etc. Biden’s increase of the corporate tax rate and creation of an internationally enforced corporate minimum tax to prevent tax dodging, and increased resources to the IRS to go after wealthy tax cheats are good starts, but there’s so much more to do. This inflation issue that has largely resolved now is just sucking all the air out of the room and distracting from all these other problems, many of which need local or state solutions.
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Normal people don’t care about technical financial instruments. We care about how far our paychecks go, and they do not go as far as they did before the pandemic. Until they do, no one is going to believe inflation has been fixed. Get it?
I’m baffled that you’re getting downvotes – like… yeah. It’s a no brainer that people primarily care about their own purchasing power, and the last few years have depressed that to a shocking degree. Not one person on Earth looks at their inability to pay for groceries or rent and goes, “Well, thank God the markets are okay!”
As for what can be done? Price controls exist. Subsidies exist. The trouble with the modern world is, the wrong prices are controlled, and the wrong products are subsidized – that stuff is all tipped in favor of pouring money into the gullets of the already wealthy and powerful. And that’s a problem that could, in theory, be fixed if anyone at any level of any government gave the slightest shit about the people they serve.
Raise taxes on the wealthy. Pass rules that a certain minimum must be paid each year regardless of how many credits or deductions they have. Ban zoning. Build as many houses as can be built as fast as possible.
More fundamentally, I think there are a lot of countries that could benefit from taking a good long look at themselves and asking –
Because I think a lot of countries have just straight-up lost the plot. They’ve lost sight of, and fail to articulate, their purpose for existing, and thus squander phenomenal resources on bullshit. They live in myths and fantasies and old cultural scripts that haven’t been relevant or functional since the mid-70s.
I think honest answers to those questions would kind of horrify people – at least, they should horrify American citizens – and it might spark an actual change of direction.
The reason they’re getting down votes is because they’re making claims about purchasing power being depressed despite no data to back it up, with data from many angles showing purchasing power has been largely restored in comparison to before the pandemic, at least in the United States I should be clear. Many western countries had worse inflation than the US and have not had their purchasing power catch up again. Then it goes to “well we don’t trust the numbers we feel differently.” And how can you argue with feelings? It’s just not a productive discussion. Not to mention distracting from many other important issues in our economy. It’s not like there was a perfect economy in 2019. And it still isn’t, even with inflation slowed and wage increases largely compensating.
I mean, this article from from AP is what we’re all talking about:
https://apnews.com/article/inflation-prices-interest-rates-economy-federal-reserve-1f83d45fc6e30c6864d1b02913ec60c6
Basically, the things that actually matter to most people – food, fuel, housing, utilities – remain more expensive than before the pandemic by significant margins. And those prices will never come back down. The best most can hope for is to earn more money to offset the price hike – which, for most people, means taking on new or additional employment just to be able to get back to where they were before the pandemic. People have lost ground. That’s the problem here.
The whole point is on average people haven’t lost any ground cause compared to before the pandemic! None of these articles talk about the 20% increase in wages over this time, just the price increases. That’s wages per hour increasing by 20% mind you, not people taking up additional jobs.
The ap has just picked a couple of the highest ones out of the entire index. Read the whole article. Not all the day to day essentials have increased that much. Average them all together and you get 20% increased cost of living over the last 4 years. Prices are 20% higher on average before the pandemic. Wages are also 20% higher on average. So real buying power is about where it was before the pandemic on average. Inflation month to month is barely even moving anymore, prices were unchanged September to October. Wages are increasing faster than inflation right now so things will continue to improve. But people aren’t walking around with their pay stubs from 2019 and 2023 while in the supermarket going, oh milk increased in price 20% over 4 years but it looks like my wage did to. People are psychologically hung up on the high price they see every day. And everytime we have a bird flu epidemic wiping out tens of millions of chickens in our horrible factory farms keeping things like eggs artificially cheap, reporters are right there ready to write sensational headlines and inflame people even more. There’s essentially nothing left to do from an inflation perspective at this point anymore, except keeping unemployment low and labor demand high so wage increases can continue and real wages can increase.
Real wages December 2019 (meaning wages in relation to inflation anchored to 1982-1984 dollars): https://stats.bls.gov/news.release/archives/realer_01142020.pdf
Real wages October 2023: https://www.bls.gov/news.release/pdf/realer.pdf
If you look you’ll note they are higher now than then. Wage increases have compensated for inflation. But for the media “inflation back to normal slow steady pace, wage increases over the last four years have compensated, wages continue out pace inflation currently” just isn’t a very attention grabbing headline. Media will always be biased toward sensationalism.
That you don’t seem to get what we’re saying is amazing. What you are talking about does not matter to most people – their own lived experience of not being able to afford basic necessities, or having to draw on savings and retirement income to afford them, are all they see. You can shout numbers at people all you like, but all they – and I – hear is, “Your own lived experience is wrong, and I know better than you do about your day to day life.”
So, let’s grant for argument’s sake that the numbers you’re citing actually say what you imply – that wage increases have made up for inflation for most people, and therefore no one has any reason to complain. You do realize that desperately job hopping to try to stay where you started economically is enervating and miserable, right? To spend three years post-pandemic finding new work, retraining, striking, and all the rest, only to find yourself economically no better off than when you started? What a nightmare.
I get that you have a pile of numbers that say everything’s rosy – but most regular people appear to disagree with you, judging by consumer sentiment polls and other surveys. The answer in that case isn’t to double down and declare that people are too stupid to know whether they’re doing okay financially – the answer is to ask yourself whether your measures are wrong, or your data isn’t capturing something critical.
No facts, just vibes!
Lording economic theory over people won’t make them feel any different about their reality.
I completely agree, but if people are talking about specific elements of economic theory, then we should accurately talk about it. If we don’t hold ourselves to some kind of intellectual standard, then words become meaningless and incredibly easy to twist into fitting whatever agenda you like. A Republican could easily say that inflation has been caused by oppressive taxes and the obvious solution is to slash taxes, mostly for the wealthy of course, but with a mild tax break for the middle class to make it politically palatable. If you know anything about how inflation actually works, you’d know that this would simply make inflation even worse as consumers suddenly have a bunch of new cash to spend, further devaluing the dollar.
Sounds like vibes to me.
The fact is that paychecks do not go as far as they did before. That’s not a vibe, that’s the difference between making or missing bills.
You’re ignoring the facts that matter to score gotcha points. This is only going to piss people off even more than they already are lol
When discussing actual economic phenomena like inflation and recessions, yes, I think it is reasonable to actually be accurate and consistent in what we’re talking about.
Inflation is one problem. Wages not matching the cost of living is another, though related, problem. Saying that inflation has largely returned to normal is true, regardless of whatever else might also be true. Someone saying that is not saying that all economic woes have been fixed and that no one has any right to complain about anything.
I’m guessing you’re implying that Biden is saying that consumers need to stop whining because inflation has normalized. That would be pretty annoying, but he’s not actually said that. In fact, he just recently gave a speech blaming corporations:
https://www.cnbc.com/2023/11/27/white-house-supply-chain-bidenomics-wins.html
He’s also launched several initiatives aiming to make supply chains more robust and thus prevent future shocks from impacting prices so severely.
Naw, I’m just implying that annoying people on the internet are doing it; ostensibly people who want me to vote for Biden.