Month: December 2022

Every month, just before the BLS releases inflation numbers, they tease us with a new release of the Producer Price Index. Here it is for November:

The PPI for final demand fell slightly to 3.6%. (As usual, this is the month-over-month change converted to an annual rate of change.) The intermediate demand index came in at -8.3%.

The PPI measures prices received by domestic producers for their output. Intermediate demand is for goods and services sold as inputs to production. Final demand measures price changes for commodities sold to their final destination. In the same way that PPI for final demand is seen as sort of a prediction of future consumer inflation, PPI for intermediate demand is seen as a prediction of future final demand.

You can see this in the chart. PPI for intermediate demand peaked about a year ago and has been trending solidly downward ever since. PPI for final demand peaked several months later and is trending downward at a more modest rate.

If you ignore the expectations game, these are very nice numbers. They both suggest that CPI is likely to follow along, though monthly changes will, as usual, be volatile. We'll see on Tuesday, when CPI numbers are released.

UPDATE: For those of you interested in even more detail, here is PPI Final Demand broken down by goods and services:

Services are generally a little less volatile than goods, and the annualized inflation rate for services clocked in at 5.0% in November, higher than the previous two months. Inflation for goods dropped to 1.2% in November. In both cases, the trendline remains strongly downward.

Did anyone see this coming? The ever-mysterious Sen. Kyrsten Sinema has decided to switch her political affiliation to Independent. She says she won't caucus with Republicans, and if she continues to caucus with Democrats the party breakdown in the Senate will stay at 51-49. If she doesn't caucus with anyone, it will be 50-49. So it won't affect Democratic control either way.

In the end, then, this probably won't make any difference. Sinema will have an I by her name; she says she'll continue to get her committee assignments from Chuck Schumer; and her voting record will likely stay about the same too. As for her motivation, that's less clear. When you get around the blather, she seems to think that Arizonans will prefer a maverick just like the late John McCain, so that's what she's going to be.

Here are five pieces of data that go a bit beyond the headlines to show us the current state of wages and the labor market. All of them show the labor market slowing down starting somewhere between January and July. The only exception is the stubborn Atlanta Fed wage tracker, which is available only as a 3-month rolling average. And even it suggests that wage growth peaked a couple of months ago.

The House passed the Respect for Marriage Act this morning and sent it to President Biden for his signature:

The legislation repeals the Defense of Marriage Act, which defines marriage as between a man and a woman and allows states to refuse to honor same-sex marriages performed in other states. It prohibits states from denying the validity of an out-of-state marriage based on sex, race or ethnicity.

But in a condition that Republican backers insisted upon, it would guarantee that religious organizations would not be required to provide any goods or services for the celebration of any marriage, and could not lose tax-exempt status or other benefits for refusing to recognize same-sex unions.

The bill was originally prompted by an aside in Clarence Thomas's concurring opinion in the Dobbs abortion case. In addition to reconsidering Roe v. Wade, he said, the court might also want to "reconsider" a few other things, including its defense of same-sex marriage. Now that's off the table:

“We can put to rest the worries of millions of loving couples who are concerned that someday an activist Supreme Court may take their rights and freedoms away,” said Sen. Tammy Baldwin (D-Wis.), the first openly gay person elected to the Senate. “We are giving these loving couples the certainty that their marriages are legal and that they will continue to have the same rights and responsibilities and benefits of every other married couple.”

I continue to wonder if this is true. Marriage has always been considered a state issue, not a federal one. It sure seems as if an activist Supreme Court could pretty easily say that Congress has no constitutional authority to regulate marriage other than in federal territories and in a few other special cases.

But they probably won't. Thomas's note was just a throwaway, the kind of thing he's been writing for decades and that everybody has been ignoring for decades. Plus the Respect for Marriage Act will make a difference. It was originally intended to be a symbolic vote, but in the end it turned out that lots of Republicans supported it too and it passed on a bipartisan basis. The Supreme Court has always been a political animal, and the fact that same-sex marriage has such widespread support makes it unlikely they'd ever want to touch it.

Here is my third triptych of the week, a series of views of the Arc de Triomphe in Paris.

The top one is at sunrise, taken from the Place de la Concorde looking west. The middle one is the same but taken later in the day. The bottom one is midafternoon, taken from La Défense looking east.

Brittney Griner has been freed from jail in Russia as part of a prisoner swap for Victor Bout, an arms dealer currently serving a 25-year sentence in the medium-security Marion Penitentiary in Illinois.

The swap is getting a lot of flak, especially from conservatives, since Bout is a legitimate bad guy while Griner is little more than a hostage who was imprisoned for having a gram of hashish oil in her bag—in other words, nothing.

This is a fair criticism, but it's worth noting a couple of things. First, Bout was a garden variety arms trader who was imprisoned only because he was caught in a DEA sting. Second, even the judge who sentenced him thought his sentence was excessive:

“He got a hard deal,” said [Shira] Scheindlin, the retired judge, noting the U.S. sting operatives “put words in his mouth” so he’d say he was aware Americans could die from weapons he sold in order to require a terrorism enhancement that would force a long prison sentence, if not a life term. Scheindlin gave Bout the mandatory minimum 25-year sentence but said she did so only because it was required.

Third, Bout has already served ten years in prison, which is arguably a fair sentence for what he actually did. Fourth, Russians sincerely believe that the US treated Bout inexcusably and have been demanding his release for years.

None of this is meant to take sides on the prisoner swap. Whatever you can say about Bout's treatment, it's clear that Griner was little more than a pawn. The problem here is obvious: even if you think Bout was treated harshly, the swap encourages other countries to arrest innocent Americans as fodder for their own swaps. As an innocent American myself, I find that prospect unnerving.

I read a piece in the Washington Post last night about a couple who took their baby to the ER and subsequently had both their kids taken away by Child Protective Services. Why? Because an X-ray on the kid in the ER showed a healed fracture on his rib cage, which is taken as all but automatic evidence of abuse.

It's worth a read, and I curiously clicked on one of the links to a study of child maltreatment investigations. Here's what it found:

This is fairly remarkable. By the age of 17, the lifetime chance of an American child being investigated is 37%. The lifetime chance of verifying maltreatment is 12%.

These are wildly high numbers, but I'm not sure how to interpret them. Should we say that "only" a third of CPS investigations turn up evidence of maltreatment? Or that one-third shows an appropriate level of caution? I'm not sure. But that topline number is still striking. CPS investigations are no joke, and the idea that something like a third of all families undergo them is shocking.

In the same piece about Facebook and wokeness that I wrote about earlier, Matt Yglesias talks about the initial vision of Vox:

One of the things that a lot of us old-time blogger types are good at is writing a lot of words across a broad range of subjects....And we thought this was scalable — that it would be relatively easy to hire a lot more people and train them based on this vision and our methods. This was basically wrong.

I couldn't help but laugh about this. Consider the kind of person who makes an ideal blogger of the kind Matt describes:

• Must be as obsessed about writing all the time as some people are about videogaming.
• Must be very widely read and have pretty good judgment about how much they know.
• Must be interested in just about everything.
• Since this is journalism we're talking about, must be willing to work for relatively low wages.

lollollollollollollollol. How many people on the planet have weirdo brains like this? And of the ones who do, how many want to do something inherently kind of silly (writing half a dozen shortish takes each day on whatever's going on right now)? And of the ones still left, how many are there who can't make twice as much doing something else?

And it gets worse. Suppose you could find 20 or 30 people like this and hire them. How many will last? The kind of person who can do what Matt describes is quite likely not the kind of person who wants to be a faceless member of a big team. They like the idea of doing it on their own and getting credit for it. You'd lose half your staff in the first year and be in a constant, fruitless, hiring frenzy trying to find ever more weirdos. It is an unsquarable circle.

During the early and mid-aughts, I heard endlessly about the power of Facebook over the news industry. But I was working remotely in Southern California and the Mother Jones newsroom was in northern California, so I heard about it only at a remove. (Plus what I read about it, of course.) My takeaway was that Facebook was mainly an economic problem because it took a lot of traffic away from our site. Less traffic meant less advertising, and that was a big problem since hardly any sites had found the key to profitability and certainly couldn't afford to have some of it siphoned away by Mark Zuckerberg.¹

There was also the problem that Facebook changed its direction every year or two and that meant all of us minnows had to adjust. When Facebook sneezed, we caught a cold.

But Matt Yglesias, one of the founders of Vox, writes that Facebook also created an entirely different problem:

Even in retrospect I don’t really understand why this was the case, but objectively speaking, hard-core identity politics and simplistic socialism performed incredibly well on Facebook during this period. That doesn’t mean journalists started pretending to be left-wing to get clicks. But people who had some authentic left-wing opinions found that writing on the subjects where they were the most left tended to generate the most traffic, and early career journalists with authentic leftist views outperformed their colleagues. So you ended up with this whole cohort of discourse structured around “Is Bernie Sanders perfect in every way or is it problematic to vote for a white man?” as the only possible lens for examining American politics and society.

I was entirely protected from this because I never looked at site statistics and no one at Mother Jones ever asked me to. If I were a younger journalist, I would have done this almost automatically because I had a career ahead of me and I needed to make sure I understood what kinds of stories were popular. Those were the ones that might help me get ahead, after all.

In any case, I assume the answer to Matt's question about the Facebook effect is fairly straightforward. This is a little less true now than it used to be, but it's pretty common knowledge that Facebook discovered early on that outrage was the emotion that kept people engaged and kept them coming back. So their algorithms were tuned to focus on posts that created outrage. In the political world that means hard left and hard right.

I assume that our editorial colleagues on the conservative side faced similar pressures from Facebook in the opposite direction. So we ended up with small but influential cadres of insane wokeness on the left and big influential cadres on the right who produced Donald Trump.

Things were always worse on the right because Facebook never had as much control there. Fox News was the big kahuna, and they controlled the outrage. Unluckily for all of us, they preferred more outrage than Facebook. That was their business from the start, after all, not just the bloodless consequence of geeks tuning an algorithm to get more hits.

Dialing down this outrage is the task of the rest of the decade. We just have so many bigger fish to fry than whether critical race theory is taking over our kindergartens or cutting early voting by three days is bringing back Jim Crow.

But I don't know how we're going to get there.

¹As an aside, it's ironic that the rare exceptions are almost all obscure trade journals or avatars of The Man: Politico, Axios, the New York Times, the Wall Street Journal. As usual, the internet hasn't empowered dissident voices nearly as much as it's entrenched establishment ones.

Well, maybe not cheap. But just about what it was a year ago. Or maybe even lower depending how you look at things.