Month: September 2022

Charlie Cooke really really doesn't like President Biden's student loan forgiveness program:

“I consider this to be a constitutional crisis,” he said. “I think that from start to finish, we are witnessing a president test the established legal order of the United States. . . . His broader party know that he’s not allowed to. But he went ahead and willfully did it anyway.”

These vast, sweeping changes are deeply out of line with our Founding documents. “To go back to first principles,” he says, “this is why we have a Congress. This is why we don’t have a dictatorship. Nothing we have seen from the Biden admin in the last two months related to this executive order would’ve been different in a dictatorship. Every decision’s been executive.”

Joe Biden, dictator!

This is the same schtick conservatives pulled on President Obama and it's equally ridiculous this time around. Is the student loan program unconstitutional? I doubt it, but it's possible. And if it is, the Supreme Court will say so and the program will be revoked.

This happens All. The. Time. Presidents push the boundaries of their authority. The Department of Justice backs them up with legal opinions. The opposition takes them to court. The court then rules one way or another.

Conservatives screamed for years about DACA, the Obama executive order that gave dreamers (kids who were brought across the border to the US at a young age) an across-the-board approval to work, go to school, and avoid deportation. Tyranny! But nothing stopped conservatives from suing—which they did—and they found a friendly district judge in (of course) Texas to rule in their favor and block an expanded version of DACA. The law then meandered through the court system, going up and down to the Supreme Court a couple of times but staying partially alive. Conservatives kept on going, though, and now that Joe Biden is president he responded in the usual way: he appealed. He'll probably lose that appeal and then move on to the Supreme Court. They'll either approve DACA; strike it down; strike it down partially; or send it back to a lower court. Some tyranny.

So let's cut out the dictator talk unless you have serious grounds for it. If the Supreme Court eventually rules against DACA, the Biden administration will obey the court and cancel it. That's how a democracy works. There are no jackbooted thugs on our doorsteps.

The Wall Street Journal, like all of us, is puzzled by the economy. Why is it that even though economic growth is flat, companies are still trying to hire more workers?

A persistent economic puzzle is why labor is still so tight amid slowing growth....Monthly payrolls have grown an average of 438,000 from January through August, nearly three times their 2019 prepandemic pace. Many employers say they continue to struggle with large staffing shortages that built up during the pandemic and are reluctant to cut head count.

This got me curious: which industries are back to their old employment level and which are still struggling to restaff? Here's the answer:

Keep in mind that January 2020 was the peak of a 10-year expansion cycle and represented full employment virtually everywhere. We're now recovering from another recession and there's no special reason to think employment should already be higher than it was at the very end of the last recovery.

But it is. Total employment is half a million higher than it was before the pandemic, and this recovery includes virtually every individual industry. The only real exceptions are restaurants and hotels, which are 300-400,000 short of their pre-pandemic numbers, and government, which is 500,000 short.

And there's only one (1) industry that's substantially below its pre-pandemic employment in both percentage and absolute terms: hotels. That's it.

So this makes things even more puzzling. With the exception of hotels, there are no industries that are really hurting right now. And yet it seems like all of them are complaining. What's going on?

Charlie isn't the only cat around here who likes to hide in the backyard bushes. Hilbert likes it too, but he has a harder time since he's bigger and less camouflaged than Charlie. Plus, to be honest, he doesn't seem to be trying really hard, does he?

The Europeans are always ahead of us with their inflation data because they're willing to release "flash" estimates before the month is even over. For September, Eurostat reported annual inflation of 10%, which is bad enough, but that's year-over-year and doesn't capture their recent big increase. If you look instead at the monthly data, inflation for the Euro area hit a stunning 15.8%:

A lot of this increase is due to huge jumps in energy costs, but even core inflation is at 11.9% for September. Inflation is just sky high no matter how you look at it.

As usual with monthly data, though, September could be a fluke. So pay attention to the trendline. The good news is that the trendline shows "only" about 12% overall inflation and 10% core inflation right now. The bad news is that the trendlines are heading steadily up and show no signs of having peaked.

Also, Eurozone inflation is not high just because there are a few outlier countries driving up the average. The annualized September rates are high all over the place. Finland is at +8.7%. Portugal is at +16.7%. Italy is at +22.4%. Germany is at +29.8%. The Netherlands is at +40.9%.

The best performers in September were Ireland and Spain, at 0%, and France, which was down -5.9%. (Though all three still had high year-over-year inflation rates.)

NOTE: The figures for core inflation go back only 12 months because that's all Eurostat provides for core inflation. I have no idea why, but that's Eurostat for you.

In addition to its monthly inflation figures, the BEA also released personal spending data today, and it was as boring as it could possibly be. Adjusted for inflation, disposable personal income went up 0.9% and personal spending went up 1.2% (both of these are month-to-month changes that have been annualized). Here's what this looks like over the past two years:

Over the past two years, per capita disposable income has gone down about $5,000 while personal expenditures have gone up $5,000. We're still making more than we're spending, but not by much.

POSTSCRIPT: If those numbers look high to you, it's because they're means, not medians, so they're skewed upward by the income and expenditures of all the gazillionaires. Normally I'd give you medians instead, but the BEA doesn't report them that way.

Core PCE is the inflation measure the Fed cares the most about but nobody else cares about at all. The LA Times, Washington Post, and New York Times barely even mention it today, while the Wall Street Journal leads with data about consumer expenditures, with PCE inflation playing second fiddle.

But here it gets pride of place this morning. And the news is not great:

Core PCE inflation was up 6.7% compared to last month (in annualized terms). The trendline still suggests it peaked in February, but it's basically been pretty flat all year. And remember—this is core inflation, so it doesn't get pushed around due to changes in energy or food prices. It just measures everything else.

Here is core PCE measured the way most people do, as a percentage change from the same month in the previous year:

This looks a little better: the August reading is 4.9% and appears to have peaked around March.

By chance, the average of PCE core over the past four months is 5.0%, exactly the same as the change over the past year. It's probably safe to say that 5% is roughly where we're at with PCE core inflation right now. That's too high and it's not declining fast enough.

Here's the latest on mortgage rates:

For a while, when rates skyrocket like this, people rush to buy houses before they go up even more. But eventually rates get too high and mortgages simply become unaffordable for many people.

But it takes a while. Back in the bad old days of 1981 mortgage rates rose to nearly 20% and there were still people buying houses. I should know: I rented out a room from a couple who were ponying up that much. Eventually, of course, rates went down and they refinanced at a more reasonable rate.

This was taken at sunset at our local Greek fair a couple of months ago. It was not actually this dark, of course. The enhanced contrast was provided by Photoshop.

Jon Chait says that Republicans are planning once again to hold the economy hostage by refusing to raise the debt ceiling. That could well be. They've done it before and today's Republicans are even crazier than the ones we thought were the ultimate in craziness ten years ago. Chait thinks the answer is for Democrats to end the threat for good:

Democrats need to take one vote to raise the debt ceiling by a quadrillion dollars. Would that vote sound bad in attack ads? Yes. Would it sound worse than a vote to raise the debt ceiling by $500 billion or $1 trillion? Not really. To most voters, any number ending in -illion sounds about as big as any other.

I've always figured there's some reason—I don't know what—that Democrats have never done something like this before. Even $20 trillion or so would solve the problem for a good long time.

As for attack ads, if Democrats do this in November or December, the next attack ads are two years off and probably don't matter. There will be some other shiny object that becomes the center of attention in 2024 and makes the debt ceiling yesterday's news. Probably something about Hunter Biden being the kingpin of the world's largest fentanyl drug ring. Or something.

So sure, give it a try. I guess the real question is whether Chuck Schumer can talk the dynamic duo of Manchin and Sinema into supporting it.

UPDATE: By the way, I'd recommend a yottabillion, not a quadrillion. There's no substantive difference of course, but a quadrillion is still a (barely) recognizable number. A yottabillion, by contrast, is more stars than there are in the universe. It would make it clear just how ridiculous Democrats think the whole debt limit issue is.

Here's a Rorschach test for you:

Stuck on the Streets of San Francisco in a Driverless Car
A reporter and a photographer went for a ride in an experimental autonomous vehicle operated by the General Motors subsidiary Cruise. There were bumps in the road.

You can legitimately read this story two ways:

• Driverless cars are pretty far from being ready for prime time. They're still slow, limited, and can strand you for no good reason.
• Wow! Driverless cars still have glitches, but they do damn well even in a famously crowded city with tough traffic. They're closer than you think.

Read the story and decide for yourself.