The Fed likes to look at the core PCE rate, and in June it finally fell significantly. It's now running at an annualized rate of 2.0%, which is right at the Fed's target. The headline rate is also running at 2.0%.
On a year-over year basis, headline PCE inflation was down to 3.0% and core inflation was down to 4.1%.
If this news had been available yesterday, perhaps the Fed wouldn't have raised rates yet again. But it wasn't, so they did.
Social networks mostly have two different kinds of feeds: one that's a simple reverse chronological listing of posts from people you follow, and another that's controlled by an algorithm. On Twitter, users are forever complaining that the platform switches them to the algorithm without asking, and I imagine Facebook is the same.
We found that users in the Chronological Feed group spent dramatically less time on Facebook....The average respondent in the Algorithmic Feed group spent 73% more time each day on average compared with US monthly active users, and for those in the Chronological Feed group, this value reduced to 37% more.
....On Facebook, users in the Algorithmic Feed group liked an average of 6.7% of the content to which they were exposed, whereas those in the Chronological Feed group liked 3.1% on average.
Users who are on Facebook's algorithmic feed are far more engaged than those on the chronological feed. You might not like to hear that, but it turns out the algorithm really does know what you like. Those on the algorithmic feed spend more time on Facebook—which means more advertising dollars—and leave likes and comments at about double the rate of those on the chronological feed.
There are also differences in the type of posts generated by the feeds, but they're surprisingly small. And neither feed makes any difference to things like news knowledge or political polarization.
So that's it. Social media companies want you on their algorithmic feed because it keeps you engaged and makes them more money. Nothing complicated about it.
David Broder has a good piece in the New York Times today about the extremist right-wing government that's now running Italy. Prime Minister Giorgia Meloni has certainly moderated her rhetoric since being elected, he says, but underneath you'll still find the same old animating radicalism. This is particularly true of her government's animus toward migrants, which is now shared throughout Europe:
Ms. Meloni’s administration has spent its first months accusing minorities of undermining the triad of God, nation and family, with dire practical consequences for migrants, nongovernmental organizations and same-sex parents....Ms. Meloni’s government isn’t just nativist but has a harsh authoritarian streak, too.
For Italy this is bad enough....In Sweden, a center-right coalition relies on the nativist Sweden Democrats’ support to govern. In Finland, the anti-immigrant Finns Party went one better and joined the government....Conservatives in Britain echo Ms. Meloni’s obsession with favoring birthrates over migration; French anti-immigrant politicians like Éric Zemmour cite Italy as a model of how to “unite the forces of the right”; and even in Germany, the Christian Democrats’ long refusal to consider pacts with the Alternative for Germany is under strain.
It's commonplace to observe that Europe has been more or less at peace for 80 years now—surely a record for the continent. Credit is usually given to wise postwar politicians or to alliance-building projects like the EU, but this misses a more fundamental reason: the ruthless resettlement of ethnic groups to their home countries after World War II. This is not something most people know about—or care to remember—but it happened. And ruthless though it might have been, it accomplished its purpose. With postwar European countries relatively homogeneous, tribal conflicts waned and peace reigned. It's notable that the only exception to Europe's peaceful 80 years came in the former Yugoslavia, where tribal tensions erupted after Josip Broz Tito died and there was no longer a leader with the iron hand to keep them in check.
But 80 years is a long time, and eventually Europe's ethnic homogeneity was bound to break down as more and more migrants made their way in. Every lesson of history suggests that this was certain to ignite, if not wars, tensions short of war. And it has. We can blame right-wing parties all we want, but they've merely been conduits for a historical inevitability.
The seemingly endless fence separating Mexico from the southwestern US.
This is why I don't support the extreme pro-immigrant position adopted over the past decade by the US left. I am, needless to say, decidedly opposed to the deliberate cruelty toward migrants that's manifested by so many Republicans. Our policies should be as humane as possible at all times. But at the same time that we should keep fighting against the baseless fear of migrants from south of the border, a reality-based approach demands recognition that we will never eliminate this fear. We can only mute it, and that only by restricting its flow.
There's a level of migration—legal and otherwise—that's low enough to keep anti-immigrant fervor in check. At a guess, it's about a tenth of a percent of the country's population per year. We're currently at five times that rate, which makes a furious tribal response almost unavoidable.
I admit that this is an ugly conclusion. But short of deliberately embracing a fantasy-based view of the world, I'm not sure what alternative there is.
The time to become skeptical of something is when, after a long period of fruitlessly waiting for the opposite to happen, everyone finally gives up and agrees it must be true. That's the current state of things regarding the sudden consensus predicting a "soft landing" for the economy. Jeanna Smialek has more in the New York Times:
The term “soft landing” first made its way into the economic lexicon in the early 1970s, when America was fresh from a successful moon landing in 1969. Setting a spaceship gently on the lunar surface had been difficult, and yet it had touched down.
I did not know that!
In 1994 and 1995, the Fed managed to slow the economy gently without plunging it into a downturn in what is perhaps its most famous successful soft landing.
This is the only soft landing in recent American history.
In late 1989, an economic commentary newsletter from the Federal Reserve Bank of Cleveland asked the question that was on everyone’s mind after a series of Federal Reserve rate increases: “How Soft a Landing?” Analysts were pretty sure growth was going to cool gently and without a painful downturn — the question was how gently.
In late 2000, a column in The New York Times was titled “Making a Soft Landing Even Softer.” And in late 2007, forecasters at the Federal Reserve Bank of Dallas concluded that the United States should manage to make it through the subprime mortgage crisis without a downturn.
Within weeks or months of all three declarations, the economy had plunged into recession. Unemployment shot up. Businesses closed. Growth contracted.
Plus 1973 and 1980, of course, which were also hard landings. Why?
The episodes all illustrate a central point. It is hard to predict what might happen with the economy when rates have risen substantially.
Interest rates are like a slow-release medicine given to a patient who may or may not have an allergy. They take time to have their full effect, and they can have some really nasty and unpredictable side effects if they end up prompting a wave of bankruptcies or defaults that sets off a financial crisis.
Stay skeptical! Everything takes longer than you think, but conventional wisdom is impatient. It's been waiting on a recession for the past year and now it's exhausted. So fuck it. Soft landing it is.
Maybe so. I don't have a crystal ball, and it's true that the economy looks to be in decent shape—though it's been slowing since January. That said, a year is not such a long time. I continue to think it's likely that Fed tightening will start to bite later in 2023. We'll see.
There's lots of talk about the skyrocketing amount of manufacturing being built lately, and with good reason:
Manufacturing construction is nearly flat from 1980-2015. Then there was a modest increase. But since 2021 it's nearly doubled, thanks mostly to the infrastructure bill, IRA, and the CHIPS Act. Presumably manufacturing employment will also increase once all these factories are finished.
"In the absence of meaningful privacy regulations, that means that people can scrape really widely all over the internet, take anything that is ‘publicly available’ — that top layer of the internet for lack of a better term — and just use it in their product," said Ben Winters, who leads the Electronic Privacy Information Center’s AI and Human Rights Project and co-authored its report on generative AI harms.
....For creators — writers, musicians, and actors, for instance — copyrights and image rights are a major issue, and it’s pretty obvious why. Generative AI models have both been trained on their work and could put them out of work in the future.
That’s why comedian Sarah Silverman is suing OpenAI and Meta as part of a class action lawsuit. She alleges that the two companies trained off of her written work by using datasets that contained text from her book, The Bedwetter. There are also lawsuits over image rights and the use of open source computer code.
I dunno. Google scrapes every bit as much data to "train" its search engine, which is a source of enormous profit. The Wayback Machine is nonprofit, but it literally duplicates huge amounts of copyrighted material and makes it publicly available. Wikipedia relies on an army of volunteers, not automated scraping, but the result is similar: an enormous website that's the product of gathering information from all over the internet. Google Books explicitly scans copyrighted works and the Supreme Court ruled that it was "transformative" and therefore A-OK.
Maybe all this stuff should be illegal. But that would sure make the internet a lot less useful for everyone. And training an AI is at least as transformative as creating an index of books. It's hard to see these lawsuits going anywhere.
The GDP report this morning was OK, but the BEA also released its estimate of personal income today. Adjusted for inflation, it increased at an annualized rate of 1.0% in Q2. Since the start of the pandemic it's up a total of 0.9%:
Not so great. Inflation numbers come out tomorrow.
The Fed likes to look at the core PCE rate, and in June it finally fell significantly. It's now running at an annualized rate of 2.0%, which is right at the Fed's target. The headline rate is also running at 2.0%.
