Month: December 2023

How are people feeling about their personal finances? Income is one way of looking at this, but balance sheets are another. That is, how much wealth do households have? Are their savings accounts flush? Are they relatively free of debt? Net worth is the simplest way of looking at this:

Since the start of the pandemic in 2020, net worth has increased at all economic levels. First, there was a big increase in 2020-21 thanks to pandemic benefits, which had a bigger impact on the poor than the rich. Then, starting in 2022, net worth fell. But in 2023 it started rising again.

In other words, you can tell almost story you want here. The good news is that net worth is up since 2020. The bad news is that everyone started spending down their savings throughout 2022. But then there's more good news: that turned around and net worth rose in 2023 even though there were no new benefits and home prices were dropping.

Overall, should this make people happy or sour? I'd say happy, but it's sort of a toss-up. At the very least, though, you can say that household balance sheets are basically in good shape at all income levels and getting better. This shouldn't be causing a lot of angst about the economy.

I was fiddling around with some numbers this afternoon and came up with something interesting.

As you know, the BLS reports earnings for all employees and for non-managerial employees, who make up about 80% of the workforce. This makes it easy to also calculate earnings for the managerial workforce. Right now, for example, wages for the managerial workforce average about $53 per hour ($106,000 per year) while non-managerial workers average about $29 per hour ($58,000 per year). This assumes full-time work.

Of course, you can also easily calculate the total number of managerial and non-managerial workers. Here it is:

Managerial positions fell only slightly during the pandemic and quickly caught up to their previous level. Non-managerial positions dropped dramatically and have only recently made back those losses.

In other words, US companies have plenty of managers but they've had a hard time attracting worker bees. Here's what that means for wages:

The 2020 spike is a bit artificial, so ignore that. The bigger point is that from the start of the pandemic to now, the average wage for all employees has been close to flat. But that hides a big difference. Non-managers have seen their wages rise about 3%. Managers have seen their wages fall about 3%.

I don't have any big insights to offer about what this means except that it might be part of the answer to why people are sour on the economy. Managers are sour because their earnings have plummeted since 2021. Non-managers are sour because their earnings have been flat since 2021. I don't know if this explains a lot, but it might explain a little bit.

This is a peacock in the late afternoon sun at the LA County Arboretum. I took this photo more than five years ago! It's the oldest not-yet-used picture in my archive.

The Fed has finally acknowledged the obvious:

Federal Reserve officials left interest rates unchanged in their final policy decision of 2023 and forecast that they will cut borrowing costs three times in the coming year, a sign that the central bank is shifting toward the next phase in its fight against rapid inflation.

They ought to be cutting rates right now, but I suppose we should be grateful for small favors.

On another note, this also pushes back on the deficit hawks who have been panicked about increases in interest payments on the national debt. They've been trying to make the nonsensical case that interest rates will stay high forever and send interest costs into the stratosphere, but the Fed put the kibosh on that today. As common sense dictates, they suggested there will be rate cuts next year and in 2025, with rates returning to around 2% after that.

In the Wall Street Journal today, Greg Ip cites a poll suggesting that President Biden has a bigger problem than inflation:

Twice as many respondents named immigration as the biggest issue in next year’s election as inflation. His disapproval on the border exceeded approval by 37 percentage points, compared with 36 points for inflation.

Not that it is much comfort, but Biden has company: Surging immigration is a global phenomenon, as tight labor markets attract migrants, often helped by sophisticated smugglers. It is also a political albatross for incumbents in countries that, like the U.S., have long been major recipients of immigrants.

Regular readers know that I agree about this on both pragmatic grounds and ethical ones. Pragmatically, it's just a fact that high levels of immigration provoke opposition that leads to right-wing backlash. Ethically, it's perfectly natural for modern nation states to control their borders and limit illegal immigration.

That said, Ip includes a chart that largely throws cold water on this whole conversation:

This shows two things. First, immigration in the US has long been considerably smaller than in other countries. Second, the absolute level of immigration is not a lot higher now than it has been for the past decade, a period of little net growth in the total immigrant population.

Now, it's worth saying immediately that I have my doubts about this chart. I'm not sure where the information for the US comes from, and it's not clear if it really accounts for all illegal immigration. That said, if it was honestly done it does suggest that net immigration has not been nearly as bad as our border hysteria suggests.

But that probably doesn't matter. In 2016 the population of illegal immigrants in the US was on a long downward trend, but Donald Trump nonetheless used it as a powerful weapon in his campaign. In the face of that, as well as obviously high numbers of asylum seekers crowding the southern border, it's not likely that dry facts will have much effect. If Biden is smart, he'll accept Republican restrictions on illegal immigration in the Ukraine aid bill and then pray that they have a noticeable effect before next year's election.

A little while ago the National Academies of Science was asked to look at the effects of social media on teenagers. They reported back today, and while they recognized the frenzy around social media they simply didn't find much evidence of harm:

The committee’s review of the literature did not support the conclusion that social media causes changes in adolescent health at the population level.... Studies looking at the association between social media use and feelings of sadness over time have largely found small to no effects.

The report is careful to note that there are some documented negative effects, primarily among very heavy users of social media and among teens who are already depressed. However, those effects were quite limited, and they took care to point out that social media also has lots of benefits:

One of the most obvious potential benefits of social media is its power to connect friends and family.... Adolescents use social media to maintain friendships and explore their identity, both central developmental tasks for their age.... Social media can be valuable to adolescents who otherwise may feel excluded or lack offline support, including patients with rare diseases or disabilities, and those who struggle with obesity or mental illness, or come from marginalized groups such as LGBTQ+ young people.... Social media can help adolescents cope with grief and bereavement offering the opportunity to connect with people who have experienced a similar loss.

....Social media use predicts a greater ability for reading and navigating information online.... Social media for academic writing has been associated with less writing anxiety and a great sense of agency for the students to write about topics important to them.... Online networks for shared hobbies, interests, or identities can be also important for young people.... In qualitative studies, youth report being more aware of social and political events due to social media.

The report gives equal time to potential negative effects of social media, including those on depression, sleep, reduced attention, and body image. Overall, though, it finds that these negative effects are both small and supported by weak evidence.

This strikes me as a well-done report. It remains clear-eyed about possible problems and solutions, but pushes back against the hysteria that often surrounds discussions of social media. For that reason, I suspect it will be ignored, but you never know.

The Producer Price Index, a harbinger of things to come in the Consumer Price Index, was once again below zero in November:

Aside from a summer spike, the PPI has been negative since early this year. This is a byproduct of the fact that inflation in goods generally has been negative: that is, prices of goods are going down. Inflation in services has been more stubborn, staying elevated all year.

This isn't perfect. The cuts between stories are too quick; the writing is a little too formal; and the speech is just a bit flat.

But those are nits. Generally speaking, this is holy shit material. How long will it be before my blog is written by a computer?

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According to the ADL, antisemitism is on the rise:

There's something odd about this. After years of modest declines, there's a sudden doubling in 2016-17 and then another doubling in 2021-22. Altogether, antisemitic incidents have quadrupled over the past seven years.

Does that seem plausible? Is it an artifact due to the rise of smartphones making it easier to report incidents? Or because we've gotten more sensitive to small offenses we would have ignored in the past? Or because, as a nation, we've genuinely gotten more antisemitic? That seems unlikely, especially since antisemitic hate crimes reported by police departments have stayed absolutely steady over the past two decades.

Your guess is as good as mine here. But if, in fact, antisemitic incidents haven't truly gone up since 2015, it means the amount of overt antisemitism on university campuses has been pretty low for the past couple of decades. I would be interested in knowing if there's any source for more reliable data about this over time.

This is just a bit of trivia, but Bob Somerby mentioned something odd today about the House committee that the odious Elise Stefanik sits on. Here's what their website looks like:

All the Republicans get nice color photos. The Democrats get crammed into a tiny space with just their names.

Seriously? Unless there's some obscure explanation for this, the pettiness on display is sort of jaw dropping.