Month: October 2021

The Wall Street Journal continues to write endlessly about inflation being right around the corner, and other news outlets are starting to join in. I suppose that's only natural since the headline inflation rate has been rising over the past few months.

That said, inflationary expectations are . . . amazingly non-panicked. It's true that consumer expectations of inflation are up, but who cares? Consumer expectations are completely useless, as everyone who follows this stuff knows. On the other hand, here's our old friend the 5-year, 5-year forward inflation expectation rate:

The 5/5 rate peaked in April, and despite rising headline inflation it's gone down since then. It currently sits at 2.20%, which is perfectly fine. And here's the Cleveland Fed's measure of 10-year inflation expectations:

The 10-year rate is currently sitting at 1.59% and hasn't changed since May. Meanwhile, TIPS securities maturing a year from now are selling for about 2% more than ordinary 1-year treasuries. TIPS are protected against inflation, which suggests that investors expect inflation to clock in around 2% or so over the next year.

I'm relatively agnostic about inflation right now. It's certainly true that we've pumped a tremendous amount of money into the economy over the past 18 months, and it's hardly ridiculous to think that might affect inflation. On the other hand, most of that money was simply replacing lost income from the pandemic. As I've mentioned before, I consider the stimulus spending of 2020-21 to be a fascinating test of Keynesian policy writ large, and I'll be as interested as anyone to see how it turns out.

Having said that, one thing I'm not agnostic about is good reporting. That means not just reporting headline inflation correctly, but showing inflationary expectations clearly if you write something claiming that everyone is freaking out about prices going up. The truth is that, at most, there's some mild fear of rising short-term inflation and absolutely none in the longer term. That may or may not turn out to be correct, but it's what the data tells us.

Here's yet another indication of how energetic the economy is right now:

Retail sales are so strong that they've not only made up the decline from the pandemic, they've made up the decline from the entire housing bubble. We may be "missing" 5 or 9 or 10 million workers, and supply chain problems may be restricting the supply of goods, but that sure hasn't stopped consumers from buying stuff.

The current line from the left about the Build Back Better bill is that centrists are forcing them to make an impossible choice when they demand that the price tag be reduced. Who do we throw under the bus? The elderly? Parents? Kids? Students? The future of the planet?

This is so stupid it makes me want to bang my head against the wall. When President Obama pushed through Obamacare, did that mean he was disparaging every other liberal priority? Of course not.

The only difference now is that somebody has written down a list of those other priorities. That's it. It's meaningless. The only question, as always, is which programs you think are best to pass. Then you pass them—or try to. This says exactly zero about the dozens of other programs that you haven't passed yet.

For my money, here are the ones to pass:

• Long-term care
• Increased Obamacare subsidies
• Childcare
• Pre-K

These are all great programs and, critically, they're political winners. This is what Democrats need right now and this is what they should concentrate on.

Apparently a lot of people would feel betrayed and heartbroken if the final bill ended up like this. That's beyond insane. It wouldn't just be a win for the liberal project, it would be a massive, unprecedented win. And it would be a massive, unprecedented win even though we barely have a majority in Congress. If Joe Manchin and Kyrsten Sinema are willing to vote for something like this, we should grab the chance and then celebrate for a month after Joe Biden signs it into law. And then it should be the backbone of the 2022 midterm campaign.

This is reality. And if we can do it, reality will be pretty damn good.

In this picture, a lone Canada goose floats silently on my local lake as the sun goes down over Woodbridge.

Originally, though, there were several geese. I got rid of them all and just left the one because I liked it better that way. Photoshop for the win!

From the Wall Street Journal:

Eviction filings in court—which are how landlords begin the process of removing tenants from their homes—were up 8.7% in September from August, according to the Eviction Lab, a research initiative at Princeton University that tracks filings in more than 30 cities. But the rate is still low on a historic basis, and, at 36,796 filings, it is roughly half the average September rate pre-pandemic.

That seems like good news, doesn't it?

I saw this yesterday:

Save this screenshot. pic.twitter.com/iSQzNKSzXn

— Michael Harriot (@michaelharriot) October 12, 2021

I'm not sure this does the work the author intends. The percentages may well be correct, but public perception is driven more by raw numbers. In this case, it means the civil rights movement produced about 40 incidents of property damage per year. By contrast, BLM protests produced about 500 such incidents in 2020 alone.

Likewise, the civil rights movement injured police about 20 times per year. BLM protests injured police 250 times in a single year.

There's more to this, but it's critical to understand how the public views things and how the media covers them. No ordinary person knows how many BLM protests there were. How could they, especially when so many were tiny marches in small towns? And the national media only covers large protests, where property damage and police injuries are most common. Researchers and policymakers (and readers of this blog) may be interested in percentages, but it's raw numbers that most people respond to.

Of course, you can toss into the mix all the breathless coverage on Fox News and other right-wing media outlets. But if these numbers are correct, BLM protesters gave them a lot to work with.

My hotel in Rome was right next door to the Argentine Embassy, which would have been handy if I'd had any kind of beef with Argentina during my stay. Happily I didn't, but I did run into these dueling sculptures every time I left the hotel.

They are busts of Manuel Belgrano and Bartolomé Mitre. Belgrano played a key role in the independence of Argentina and created the Argentine flag. Mitre was a pragmatic liberal who fought on the winning side of the Argentine civil war in 1861. He was elected president in 1862 and founded La Nación in 1870.

As you can see, Belgrano has a strong staring game, and my money is on him to eventually prevail in his contest with Mitre.

We are currently suffering from a supply chain crisis. And yet we also have 40 or 50 container ships routinely anchored off the coast of Los Angeles waiting their turn to unload their cargo.

This doesn't compute. The supply chain is obviously trying to deliver lots of stuff to us—the sign of a booming economy—but the real problem is that our biggest port can't handle the load. Finally, though, we're doing something about it:

The Port of Los Angeles will begin operating around the clock as the White House pushes to clear supply chain bottlenecks threatening the holiday shopping season and slowing the country’s economic recovery from the global pandemic, senior Biden administration officials said.

....Under the plan, the Port of Los Angeles will nearly double the number of hours that cargo is moving off container ships and onto highways by having crews work through the night. Members of the International Longshore and Warehouse Union will fill the extra shifts, according to officials.

In addition, major shippers and retailers — including Walmart, FedEx, UPS, Samsung, Home Depot and Target — will ramp up their operations to clear cargo out of the ports, freeing up more space on the docks.

It's not clear to me why it took so long to do this, but good on Biden for putting some pressure on the port, the union, and the shippers. We can't very well spoil Christmas, can we?

The headline CPI index in September clocked in 0.41% higher than the previous month, an annualized rate of 5.1%. This is a tick higher than it was in August, though still quite a bit lower than the peaks of earlier this year:

Core CPI, which excludes food and energy, came in at 3.0%. Compared to 12 months ago, the inflation rate for food rose to 4.5%.

As always, this is just one month of data and not something to be panicked over. Nonetheless, it clearly suggests a little more inflationary momentum than we had last month.

Here's another chart from the American Family Survey. This one is bonkers:

Take a look at the right-hand panel: it shows that in 2020 Democrats were happier than Republicans about the helpfulness of state and local government—which is no surprise since Democrats are generally more positive about government programs than Republicans. In 2021, everyone was even happier about state and local government, but the difference between partisans remained about the same.

Now take a look at the left-hand panel. When Donald Trump was president, Republicans were way more positive about the helpfulness of the federal government compared to Democrats. But in 2021, when Joe Biden was president, Republican views plummeted and Democratic views skyrocketed even though a neutral observer would say that very little had changed.

This is nuts. On a question of a fairly concrete nature, the partisan split went from net +28 to net -26. But only for the federal government. The partisan split for state and local governments, which didn't have Donald Trump or Joe Biden to influence things, barely budged.

But this doesn't mean that views of state government aren't partisan. Quite the contrary. States mostly have governments that reflect the populace: Republicans have Republican governments and Democrats have Democratic governments. So it makes sense that partisans on both sides would register satisfaction with how helpful their state government was.

More generally, this is a dramatic illustration of a general point: never take seriously an issue poll that just shows an overall number. When you break it down, you'll always find a huge partisan split, and that's what really matters. In today's America, partisanship rules everything.