Kevin Drum

I don't have any special reason for posting this, but it's something I noticed a while back and felt like sharing:

The thing I noticed is that even during recessions consumer spending barely changes at all. Half the time it actually goes up, and the other half of the time it declines only slightly. The only significant drop in consumer spending was during the Great Recession in 2008.

And consumer spending virtually never drops before a recession, so it's of no use as a bellwether. It just keeps increasing until suddenly it doesn't.

For what it's worth, this is per-capita spending, so it's a mean, not a median. This means it's skewed upward by the small number of zillionaires in the sample. It would be interesting to compare this to median consumer spending, which would give us a better idea of spending just in the middle income range, but as far as I know the BEA doesn't publish that.

UPDATE: Here are consumer expenditures just for the middle income range:

This only goes back to 1984 and it's annual, so it's not as useful as the top chart. However, it shows roughly the same thing: flat spending in 1991, increased spending in 2001, and sharply lower spending in 2008.

For what it's worth, here's a chart showing the latest on the inverted yield curve, a condition where the yield on long-term bonds is lower than the yield on short-term bonds:

As you can see, the inverted yield has a perfect track record of predicting recessions over the past 50 years. However, it takes 1-2 years between the time the yield curve goes negative and the start of the recession.

So where does that leave us? It's been a little more than a year since our current inversion started. Also note that the current inversion is the deepest since 1980. This suggests a strong recession will start sometime toward the end of the year.

Or maybe not. The inverted yield has a good track record, but the pandemic has screwed everything up. Maybe this time it will finally fail.

For some reason the BLS does an annual report about people who were born from 1957-1964. Why? It's a bit of a mystery. But since that cohort includes me, let's see what they have to say.

• Between the ages of 25-56, the average person in this cohort held 7.1 jobs. This makes me below average with only five jobs during that period.
• The average person in this cohort was employed 78% of the time. I am above average at approximately 100%. The lowest number was for Black high school dropouts at 46%. The highest was for men with a college degree at 89%.
• At age 56, a startling 46% of high school dropouts reported health conditions that limited the work they could do. Among those with a college degree it was only 10%.
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• Between ages 45-56, the average increase in earnings (adjusted for inflation) was 0%. I am below average on this score, at about -70% or so.

I guess that's about it. You're welcome.

These two stories both ran on the same day. First is the Wall Street Journal:

Pay for new hires is starting to shrivel after years of hefty salary bumps, requiring workers to reset what financial gains to expect from switching to a new job.

Wages, especially for people who changed jobs, climbed in recent years as companies competed for workers to fill pandemic-induced labor shortages. Now, as the job market cools and businesses become more cautious in their hiring, many companies are paying new recruits less than they did just months ago—in some cases, much less.

Next is CNN:

When employers deliver a job offer, it had better come with some teeth: Americans’ wage expectations have hit record highs, according to a Federal Reserve Bank of New York survey released Monday.

Job seekers’ average reservation wage — the lowest pay they’d be willing to take for a new job — climbed to $78,645 in July 2023, up nearly 8% from July of last year.

So . . . apparently workers are demanding more—a lot more—and employers are offering less—a lot less. This doesn't strike me as a stable situation. Something has to give, and I suspect it's going to be workers.

Alternatively, both of these stories are standard business press bullshit—the former because it relies on unreliable data from the likes of ZipRecruiter and Gusto, and the latter because it's based on a survey instead of something from real life. I report, you decide.

Just in case anyone could use a refresher, here are the most recent six "scandals" that have preoccupied Republicans during the last two Democratic administrations:

• Benghazi
• IRS tea party targeting
• Hillary's email
• Durham investigation
• Afghanistan withdrawal
• Hunter Biden

And here's how they turned out:

Benghazi (2012-14): There was no "stand down" order and no denial of air support. Nobody lied about the cause of the enemy attack. Administration statements were generally accurate given what was known at the time they were made. The "Innocence of Muslims" video really did play a role in the attacks. Security at the consulate was sufficient, and in any case was provided mostly by the CIA, not State. There was no cover-up related to security. The attack was primarily opportunistic, not planned, and was carried out by a mixed group. There was no incompetence on the part of Hillary Clinton or the State Department.

Two years after the attack, all of this was finally acknowledged by Republicans when the House Select Intelligence Committee—controlled by Republicans—issued its final report. Their exoneration of the White House was sweeping and nearly absolute.

IRS (2013): Initially the IRS released records that made it look like they were targeting tea party groups over their tax-exempt status. However, that was because the initial demand from Republicans had been solely for records of conservative groups. It took several years, but when a broader record search was done it turned out there had never been any partisan conduct at all from the IRS. In fact, liberal groups had actually been targeted far more than conservative groups.

Hillary's email (2015-16): In the end, the final FBI report showed that Hillary had done nothing seriously wrong. She used a single account hosted on a private server for both work and personal emails, which was probably a mistake in judgment but not done with any intent to withhold anything. There is no evidence that any foreign adversary hacked the server. She turned over all official emails when requested. Before she handed them over her lawyers culled out personal emails, and there's no evidence that any work emails were deleted in the process. In fact, extensive evidence makes it all but impossible that this happened. Her personal server was eventually wiped clean, but this was part of a routine change in record retention policy that was botched by her hosting service. During her time as Secretary of State she sent and received only three classified emails, all of them trivial. After the fact, State and CIA argued over some other emails—almost none of them initiated by Hillary—with CIA concluding that they should have been classified. Hillary did nothing wrong except for relying on State's classification in real time. The FBI's report is an almost complete exoneration of Hillary.

Durham investigation (2019-23): John Durham was appointed in hopes of demonstrating that the FBI's investigation of Donald Trump's ties to Russia was unfounded and illegal. However, despite continual leaks and feverish indictments insinuating otherwise, Durham never found anything of the sort. In the end he indicted only three people, all on trivial charges, and even so managed to lose two at trial and win only a plea deal on the third. We know now that, in fact, Trump's presidential campaign did have links to the Russian government. The FBI did have a perfectly sensible reason to open an investigation into this. Vladimir Putin did try to interfere with the election in Trump's favor. There were never any intelligence operations targeting Trump. There were no illegal actions by the Hillary Clinton campaign. And several members of Durham's team did quit because of disagreements with him over prosecutorial ethics. Every leak from Durham produced excited reports from Fox News, but by the time he was finished he had produced nothing.

Afghanistan (2021): Joe Biden didn't set the date of withdrawal. It had been set by Donald Trump during the previous administration. The evacuation was chaotic for the first four hours of the first day, but proceeded efficiently for the the rest of the month. The State Department worked heroically to approve visas in the face of obstacles previously put in place by Trump aides. Over 100,000 people were flown out, including all but 300 Americans. There were almost no fatalities aside from a single ISIS suicide bomber. All in all, it was an impressive operation by the Pentagon and State Department under the most difficult circumstances imaginable.

Hunter Biden (2020-present): Hunter's  infamous laptop—mysteriously produced by Rudy Giuliani just before the 2020 election—ended up revealing nothing but some embarrassing tidbits. Joe Biden didn't try to get a Ukranian prosecutor fired because he was investigating Burisma, Hunter's employer. It was official administration policy—and the policy of most Western countries—to pressure Ukraine to fire the prosecutor because he was corrupt. Although Hunter failed to pay his taxes for two years, he eventually settled with the IRS and paid them in full. To this day there remains no evidence that Joe Biden was involved with Hunter. In fact, there's barely any evidence that Hunter himself ever did anything illegal.

Under the circumstances, is there any good reason to think that any Republican investigation is worth believing? All of them have been characterized by a constant drip of misleading leaks and none of them have stood the test of time. On this score, Republicans should always be presumed guilty until they prove their innocence.

I just got back from my 6th COVID vaccination.

It's all for the best, since my last one was a year ago, but that's not why I got it. I got it because it turns out the CAR-T procedure wiped out all my existing immunities. I only found this out a couple of weeks ago, which means I've been wandering around for the past couple of months with no COVID immunity.

Anyway, I now have a year's worth of vaccinations to get, everything from flu to polio to Tdap—although, oddly, not MMR. I wonder why I don't need that one?

Bags o' cotton candy for sale on the Balboa peninsula. "Please Don't Squeeze!"

There are two ways of looking at the Hunter Biden tax 'n gun case:

The whistleblower view: Hunter was involved in some serious criminal acts but prosecutors let him off easy due to political pressure (i.e., the White House quietly pushing them to back off).

The prosecutor view: No ordinary person would be criminally charged for the stuff Hunter did, but he was charged anyway due to political pressure (i.e., Republicans yelling and screaming).

Savvy readers will note that the first view gets far more media exposure than the second one, even though there's essentially no evidence for it aside from the opinions of the whistleblowers, who feel slighted because prosecutors disagreed with them. This media imbalance is largely because Republicans trumpet their innuendo loudly and persistently while Democrats mostly want to keep their distance from a guy who is, everyone agrees, not a sympathetic figure.

A friend of mine expressed dismay the other day that the Hunter Biden investigation had taken so long and come up with so little. Maybe, I said, that's because there was nothing to come up with. Sleazy is not the same as illegal, after all, and it's not illegal to sit on Burisma's board or deposit payments in offshore accounts or act as a lobbyist for Chinese firms.

Even the two criminal charges that were eventually filed against Hunter are unusually weak. In particular, tax payment disputes are typically administrative, not criminal, and end up with deals for payment of the amount due plus fines. Buying a gun while using drugs is a criminal offense, but it's virtually never charged. The diversion deal offered to Hunter by prosecutors is, if anything, more severe than normal.

Maybe it will eventually turn out that Hunter committed some crimes. Perhaps he failed to properly register as a foreign agent, for example. But so far, despite the sound and fury from Republicans that endlessly implies criminal behavior, they've come up with nothing. It's funny how often that's the case.

The Wall Street Journal says auto prices are unsustainable, leading to a surge of delinquencies. I'm not so sure of that. First up, here's the average monthly payment on a new car over the past few years. This takes into account both the rising price of cars and rising interest rates:

That doesn't look so bad. Here's the flow of auto loans into delinquency. This is for all loans, not just the subset the Journal cherry picks:

The delinquency rate has been rising, but at the moment it's returned only to its pre-pandemic level. The news is a little worse for young borrowers, who have delinquency rates slightly above their pre-pandemic level, and a little better for older borrowers, who have slightly lower rates. But the differences are very small, and overall there's no surge of auto loan delinquencies.

It's a good idea to keep an eye on this, especially the 30-day delinquency rate, which is rising fairly steeply, but so far that's about it.

June's drop in Southwest border crossings is no more. In July we were back up to 183,000:

Of these, CBP reports that 132,000 were illegal crossings and 51,000 were requests for asylum. Both are up from June.