Author: Kevin Drum

This chart shows the biggest difference between the Great Recession and the pandemic recession:

Starting at the beginning of the Great Recession, personal income declined and didn't regain its old level for three years. But during the pandemic recession, thanks to trillions of dollars in direct aid, personal income rose. This is why NBER officially dated the recession from February to March 2020, a period of only two months. From April 2020 forward there was no recession, and income has been up substantially ever since then.

This is one reason that I'm skeptical about extending the eviction moratorium. It's true that no matter how universal, some people will fall through the cracks of any aid program. In this case, though, I'll bet it wasn't very many. That's one of the reasons that states have been so slow to distribute rental assistance: most of it just wasn't needed.

This is a frozen lake near Aspendell, about a dozen miles west of Bishop. Or maybe it's a reservoir. I don't remember. It's labelled "Intake Two" on Google, which sounds kind of man-made, doesn't it?

The Wall Street Journal sure is a strange newspaper. Today they printed this chart:

Despite the fact that the Journal has a sophisticated readership, they didn't bother to adjust these numbers for inflation. They do this all the time, and it's perplexing. The chart as it stands tells us almost nothing.

Here's the same chart adjusted for inflation:

The obvious things to see now are (a) earnings are higher across the board in 2020, and (b) seniors in 2015 and 2020 continued to work and earn money at a higher rate than before.

The Journal is focused on the fact that millennials are starting to enter the peak earning years of 35-44 and wonders how they're doing. On income alone, they're doing great: the 2020 cohort of 35-44 year-olds is averaging about 15% higher than previous cohorts.

But what about debt? The current cohort of 35-44 year-olds appears to have average debt of $60-70,000. But what about the 2015 cohort of that age group? And the 2010 cohort? I need some help with that. I'm sure the data is available somewhere, maybe in the Fed's national accounts or perhaps in the Census Bureau's microdata. But I'm not able to extract it from either place.

Still, debt aside, today's 30-somethings have been earning as much or more than their predecessors ever since they entered the job market. On average, that is. Needless to say, there are unlucky ones who didn't.

I have a question. But before we get to that, I have a couple of pieces of background material. First there's this:

Before the current Taliban offensive, U.S. officials said they didn’t expect the takeover of any provincial capital until fall at the earliest. Instead, a carefully planned strategy carried out by the Taliban has produced swift battlefield advances....The latest U.S. intelligence assessment said Kabul could fall to militants in as soon as a month, officials said. U.S. officials now worry that Afghan civilians, soldiers and others will flee the city ahead of a Taliban assault.

Second up is Biden's hope that diplomatic talks can accomplish something:

The Biden administration has mounted a last-ditch effort this week to convince the Taliban, as it continues its relentless march across Afghanistan, that the world will reject it if it takes over the entire country by force. In the largest such gathering since U.S.-Taliban talks began nearly two years ago, representatives from Russia, China, Afghanistan’s regional neighbors, European powers, the European Union, the Organization of Islamic Cooperation and the United Nations have converged on Doha, Qatar, for U.S.-led meetings with the militants.

....Russia, China, Iran and others in the region have recently hosted delegations of senior Taliban officials, treating them as “diplomats, as a kind of hedge,” said a senior Biden administration official, one of several U.S. and European officials who spoke on the condition of anonymity to discuss the sensitive diplomacy. “They all condemn it and say it is not in their interest,” the official said of a Taliban takeover. “Now is the moment we will see how much they’re willing to press for” a negotiated political solution “and to really signal to the Taliban that that’s the expectation.”

So here's my question: Does Biden actually believe this stuff? I mean, did he initially think that the Taliban was fairly weak and would take months just to take over a few northern provinces? And does he now believe that a united front will persuade the Taliban to leave Kabul alone?

Neither of these things has ever been remotely credible. We've dealt with the Taliban for the past two decades and we know that their aim is to take over the entire country, full stop. We also know—or have every reason to suspect—that government forces will almost literally abandon entire cities rather than fight the Taliban. There are still a few forces left who can fight, but only a few, and they won't present the Taliban with much trouble. So whether the Taliban takes over the central government in 30 days or six months is mostly down to whatever's most convenient for them.

Does Biden know this and is just trying to show a brave face? Or did he believe the happy talk military advice he got? If the latter, he'd be well advised to fire a few people.

I don't think this will come as a surprise to anyone, but Charles Gaba has plotted vaccination rates for all 3,144 counties in the United States. Here they are:

It's pretty obvious that the redder a county, the worse its vaccination rate. Of course, red counties also tend to be older, more rural, more conservative, less educated, and more likely to watch Fox News, all of which are associated with lower vaccination rates. So there's a lot going on here.

How will our torrid economic expansion end up? The following is just one possible scenario based on projections from other people along with some educated guesswork. First, here is the CBO's projection of potential GDP:

Even if our current growth rate slows down a bit, as it surely will, we'll make up all the loss of GDP we suffered during the pandemic by the first quarter of 2022, with GDP running at about $23.7 trillion. Now here's worker productivity:

Productivity jumped during the pandemic and shows no sign of returning to its pre-pandemic level. Even if productivity growth slows down a bit, it will hit about $153,000 per worker by the first quarter of 2022.

At this rate, by 2022 we will have a labor force of about 155 million workers compared to:

• Current employment of 151.5 million
• Pre-pandemic peak of 158 million
• Trendline level of 163 million.

In other words, it's quite plausible that by the beginning of 2022 the economy will be running at full capacity with a workforce that's only 3.5 million higher than it is today. This compares to an 8-million worker "gap" that you hear about frequently, which is based on employment following the pre-pandemic trendline.

As I said, this is just one scenario, though it's a plausible one. I think it's quite likely that we'll never make up that 8-million worker gap. By the start of 2022 we'll have a roaring economy at an employment level only 3.5 million higher than it is now.

It's been common for jobless recoveries like this to follow recent recessions. Employers learn they can do more with less, or they adopt technology at higher levels and then keep it when the recession ends. In any case, the real employment gap right now is probably around 3-4 million workers. Or so I'm guessing.

For no particular reason, here is the maximum Obamacare premium under the terms of the January stimulus bill. The $3.5 trillion reconciliation bill would make this permanent:

This fixes one of Obamacare's worst problems: the subsidy cliff at (approximately) $80,000 for a family of three. At that point, all subsidies ceased and the cost of insurance was suddenly at the market price, which would most likely be in the range of $15-30,000, depending on age.

Under the new terms, the cost of insurance is reduced for low-income families and capped at 8.5% of income (or less) for everyone. A middle-class family of three making $100,000 now has a maximum premium of $8,500.

This is a huge change and finally makes Obamacare genuinely universal. We can do better, and eventually we will, but for now this is one of the most important provisions of the reconciliation bill.

The warning:

Global warming is dangerously close to spiralling out of control, a U.N. climate panel said in a landmark report Monday....U.N. Secretary-General António Guterres described the report as a "code red for humanity". "The alarm bells are deafening," he said in a statement. "This report must sound a death knell for coal and fossil fuels, before they destroy our planet."

The reality:

Greenhouse gas emissions from the U.S. energy industry are on track to surge the most in more than three decades as utilities increasingly turn to coal to power the economic recovery from the COVID-19 pandemic. Carbon emissions will swell 7% this year to 4.89 billion metric tons, according to government data released Tuesday, the biggest increase since at least 1990.

Welcome to the world of h. sapiens.

Every year I take a picture of a California poppy during wildflower season. Here is the 2021 version.

Sen. Joe Manchin has some issues with the $3.5 trillion reconciliation bill that Democrats want to pass:

There are still serious hurdles ahead for the bill. One of the most centrist members of the Senate Democratic caucus, Joe Manchin, said after the vote that he has “serious concerns about the grave consequences” of another large spending package.

“Given the current state of the economic recovery, it is simply irresponsible to continue spending at levels more suited to respond to a Great Depression or Great Recession — not an economy that is on the verge of overheating,” Manchin said.

Joe needs to learn his economics. This bill isn't intended to be an economic stimulus.

Deficit spending stimulates an economy in recession, but the reconciliation bill is supposed to be fully paid for. If that's really the case, then it will have no significant effect on the economy one way or the other. It's just a collection of new programs, and Manchin's vote should depend solely on whether he supports the various programs contained in the legislation.

Now, if there are some programs Manchin doesn't support, then fair enough. He should work to remove them from the final bill. But don't use an "overheating" economy as an excuse.