Kevin Drum

Adam Ozimek and John Lettieri talk about housing:

How the next president can solve America’s housing crisis

U.S. housing costs are out of control.... Renters have not fared better.... The main reason housing is too expensive is that we don’t build nearly enough of it. The most recent estimates from Freddie Mac place the national shortfall at a staggering 3.8 million housing units.

....How did we get here? After all, buyers want to buy and builders want to build. The answer is found in a labyrinth of local zoning rules, building codes, and land use regulations that shape the map of what gets built and where. Thanks to the proliferation of local red tape, it is now impossible for the market to deliver the housing supply Americans need at prices that are broadly affordable.

The first thing we should do is call this by its proper name: California's housing crisis. That estimate of a 3.8 million unit shortage is virtually all in California. The rest of the country is OK.

But I want to push back on more than that. Let's start with the popular notion that red tape and zoning are making it impossible to build housing. Here are raw housing starts over the past few decades:

A housing start happens when a builder has acquired all the necessary permits, approvals, and zoning variances needed to break ground. It's currently right at its 40-year average.

This is strictly a measure of red tape: is it possible to build the volume of housing we need? The answer is obviously yes. And we built more in 2005, when zoning regulations were little different than they are now.

But are we building as much housing as we need? That requires a different look at things. The question is: how much net housing are we building each year compared to the net number of new buyers?

Net housing is just new units minus demolished units. Net buyers is a little more complicated, but a reasonable estimate is the number of people who turn 25 each year minus the number of people who die. Here's the ratio of those two things:

On average, we've been building more housing per buyer recently than we did in the '80s and '90s. And the level right now is historically high.

(The 2020-22 spike is due to COVID killing lots of people.)

But if we're building at a normal pace, why have prices skyrocketed? This gets a little fuzzy. The price of single-family homes is up, but that's largely because of the 2022 boom. Who knows why weird booms and busts happen? But if you look at the bigger picture it's not clear if housing really has gotten much more expensive lately:

Compared to wage growth, CPI rent is pretty much unchanged. And the two big private research firms disagree violently about how much rent has gone up after 2021. Average them together and they pretty closely match wage growth.

There are other things you can look at to judge the housing market. For example, a low rental vacancy rate means that housing is tight:

The vacancy rate is a little low right now, but not at crisis level. Take out California's super-low 4.4% rate and things would probably look pretty normal.

Bottom line: Outside of California, the evidence doesn't support the idea of either a red tape crisis or a more general housing crisis. The post-COVID scene did have some weirdness to it that we might not have fully worked through yet, but you shouldn't get panicky over a couple of years of pandemic weirdness. Nor should you overreact to media accounts of housing in California or the very hottest cities. For 90% of you, the housing market is, at most, a little warmish, nothing more.

Here's Hilbert in his box, staring into the room to keep an eye on Charlie, who was rolling around on the floor while I took this picture. Plus Marian was around. Hilbert loves to keep an eye on Marian.

Today is a milestone: it's been ten years since I was diagnosed with multiple myeloma. Since then I've been treated with Velcade, Cytoxan, an autologous stem cell transfer, Revlimid, Darzalex, Pomalyst, Emplicity, Carvykti CAR-T, and now Talvey. And of course the Evil Dex™ has been along for the whole journey.

Overall, it hasn't been all that bad until now. Yesterday was supposed to be my first regular dose of Talvey after the hospital stay, but I canceled it until my taste buds and breathing recover. Once that happens, I'll have to decide what to do next: try another dose of the Talvey or talk to my oncologist about switching to a different bispecific treatment (which would require yet another stay in the hospital while they ramp it up). We'll see.

As I've said before, I haven't learned any deep life lessons from this experience. I just wish it had never happened. Nor has there ever been any bravery or resilience or any of that involved. The heroes of this story are the research scientists who invented all the different molecules I've taken over the years. My part was only to take the meds the doctors recommended and put up with whatever they did to me. The alternative was worse, right?

So happy birthday, cancer. May you have many more.¹

¹Because every additional birthday for the cancer is an additional birthday for me.

Donald Trump is full of stories about his negotiating prowess. Most of them are fiction, and even the ones based on a grain of truth are twisted and exaggerated to fit his standard heroic narrative:

• Often, no one has ever even negotiated the thing before Trump arrived. Why? Because they're stupid.
• His stories invariably involve crude threats.
• The other side then caves, usually by calling up Trump. Never because Trump called them.

Here are some examples. #4 and #6 are loosely based on things that actually happened. The others are just inventions of Trump's febrile imagination.

1. John Deere: "I said, ‘If John Deere builds those plants, they’re not selling anything into the United States.’ They just announced yesterday they’re probably not going to build the plants, OK? I kept the jobs here.”
   Reality: This simply never happened.
2. Apple CEO Tim Cook, who wanted an exemption from Trump's tariffs on China: "I said, look, I'm going to give you a one-year break but I want you to start building your factories in this country.... You have everything in China. I want you to move it from China back to our country. And he started doing that. He built a factory, a big one, in Texas."
   Reality: The factory Trump is talking about was built in 2013, long before he was on the scene.
3. South Korea: "I told South Korea, you're going to have to pay for your military. We have 40,000 troops over there. You're going to have to pay.... They said, 'No no no, we will not pay, we will not. We haven't paid since the Korean War'.... $5 billion a year to start off with. They went crazy. They agreed to two. I got $2 billion for nothing.... You know what [Biden] did? They cut off the deal that I made where they were paying. They're back to nothing."
   Reality: South Korea has been paying for US troops since 1991. Trump negotiated a routine small increase, but nothing more. Biden then negotiated another routine small increase. These negotiations are scheduled to take place every 3-4 years.
4. Emmanuel Macron, over a proposed French tax on tech companies: "He was going to tax American companies doing business in France.... I called him and I said, 'Emmanuel, you're taxing American companies.'... I said, here's the story: Every bottle of wine and champagne you send into the United States, effective immediately, and I'm signing it as we speak, I'm charging you 100%.... Calls me back in about  three minutes, 'We have decided to remove the tax.'"
   Reality: Macron did propose a tax on American tech companies doing business in Europe, and Trump did threaten to retaliate with tariffs. Macron wasn't able to get other European leaders on board and eventually withdrew the proposal. Trump's phone call is ridiculous fiction.
5. Dennis Muilenburg, CEO of Boeing, over a contract for upgraded Air Force Ones: "I said, 'Dennis, it's got to have a three. 5.7 is too much.'... So he calls up after two, three months.... 'Sir, 3 billion, 999 million, nine nine nine nine and 99 cents.' I said, you've got yourself a deal. Then I asked, 'Did nobody ever negotiate with you?' 'Well, not really, sir. It was just, this is the price, we'll take it.'"
   Reality: The Air Force One contract was the subject of longstanding negotiations and the contract price varied over time. It was never as high as $5.7 billion, as Trump claimed, and never below $4 billion. Trump played virtually no role in the entire thing.
6. Central American countries refusing to accept deported criminals: "The generals told me, 'Sir, we can’t bring them back. The countries won’t accept MS-13 gang members. They won’t accept them.' And I said, 'Really? How much do we pay these various countries in terms of economic aid?'...Tell them they’re in default. They’re delinquent. We’re not paying them anymore because they won’t accept it. And you know what happened? They all called me. Every one of them. They said, 'We would be honored to take them back, sir. We would be honored.' It was so easy."
   Reality: Trump did cut off aid to to several Central American countries, but it was because he wanted them to halt the flow of outbound migrants. It had nothing to do with deportations. Aid was restored after reaching normal agreements a few months later. Nobody called Trump begging for relief.
7. The Taliban, as told by Wesley Hunt: During these negotiations, Trump told Taliban leaders that he would kill them “if you harm a hair on a single American,” prompting the translator present with them to appear stunned. “And Trump goes, ‘Tell him. Just tell him what I said!’” Hunt said on The Sage Steele Show. “Reached into his pocket, pulled out a satellite photo of the leader of the Taliban’s home, and handed it to him, got up, and walked out the room.”
   Reality: There's no record of this happening. The real story is that Trump was desperate to withdraw and negotiated an epically bad deal.

It's worth noting that it's widely agreed that Trump is historically a very poor negotiator. Early in his career he massively overpaid for a USFL team; the Eastern Shuttle; the Plaza Hotel; and his Atlantic City casinos. Then he went bankrupt. Since then he's overpaid for golf courses and hotels, which is why they make little to no money for him. His recent income has come mostly from The Apprentice and from licensing and management deals.

Nestlé is recycling inflation as an excuse for lousy sales:

“The perception of consumers everywhere but especially in the U.S. is that food prices are high,” Chief Executive Laurent Freixe said in an interview, adding that many shoppers feel stretched after a period of surging inflation.

....The comments came as Nestlé reported weaker-than-expected third-quarter results and slashed its full-year sales forecast, warning that consumers around the world are pulling back on spending even as price rises ease.

I don't know about the world, but in the US consumers aren't pulling back on anything:

Total food spending surged after the pandemic and has stayed high ever since. If you squint, there's been a slight cutback this year, but that's all.

Consumers are spending plenty on food. Nestlé just got greedy with its price hikes and killed the goose laying the golden eggs.

Behold the latest from our free-speech-lovin' former president:

Trump and his fans are getting desperate. They've been trying for the past week to get someone, anyone, interested in their latest scandals—a trivial plagiarism tiff, an inconsequential clip from 60 Minutes, Tim Walz unloading a shotgun, Biden supposedly withholding aid to red counties—to no avail. That's because the right-wing Wurlitzer, usually so effective at setting the agenda, can't manage to make any of them worth even a "Trump Floods the Zone With Crap" thumbsucker.

Meanwhile, Trump is canceling appearances, threatening to call out the National Guard on voters who oppose him, demanding CBS be taken off the air, declaring that it should be illegal to criticize judges he likes, and threatening to prosecute Google for "only revealing and displaying bad stories about Donald J. Trump."

I recommend that no one vote for this guy.

It's naptime at sea.

As time has passed, it's become clearer what really happened to sales of electric vehicles over the past year:

There was no general slowdown. Rather, sales grew steadily until January 2024, when they suddenly fell off a cliff. Then they continued their usual growth rate.

I have no idea what happened here. There were no big changes in the federal tax credit program. Nor does there seem to have been any other outside event. But there must have been something. Sales don't drop by a third for no reason, and this has never happened in previous years.

Anybody have any ideas?

A reader points me to an Adam Tooze substack today about inflation. Tooze admits that even his own personal reaction to inflation hasn't matched the dry reports from the BLS:

Because, yes, I actually do live in America and I have experienced what has happened on supermarket shelves. Several times I’ve been brought up short by jaw-dropping price hikes for everyday items — milk, fruit, veg, a cup of coffee, a loaf of bread, toothpaste etc. There’s been a price shock, all right. On the ground, in day to day life it feels far more serious than the data that dominate the macroeconomic policy discussion would suggest.

Tooze suggests the answer lies in "anti-core" inflation—that is, inflation for only food and fuel, which is the stuff consumers notice the most:

Anti-core inflation skyrocketed in 2021-22, which explains the mystery of why people feel worse about inflation than the official figures suggest they should.

But there's a problem with this: it's really just gasoline. During our recent inflationary surge, food prices went up only slightly more than overall inflation. It was gasoline that more than doubled, and it's no mystery that consumers reacted strongly to that. It's practically a cliche that gas prices determine presidential elections.

The other part of the explanation isn't food per se, it's that we humans are wired to overreact to outliers. One huge increase gets seared into your brain far more than a dozen modest increases. Here are some selected food items:

Overall food inflation was roughly 14% in 2021-22. But look at the outliers! Eggs up 83%. Margarine up 54%. Pop Tarts up 27%. Coffee up 21%.

And even this hides some large, but very temporary increases caused by shortages or plagues or whatnot. Those things might not last long, but they stay with you, especially if other prices are all going up too.

So that's my guess. It's not anti-core that explains things so much as gasoline + food outliers. Add in some broad math illiteracy and you've got lots of people who "feel" like prices have doubled when, in reality, they've only gone up 14% once you consider that, for example, eggs actually make up a minuscule part of your spending.

But that's logic. It's not how emotions are born.

POSTSCRIPT: Plus, don't forget that we have a vast right-wing network of politicians, pundits, and media that have a strong interest in blanketing voters with alarming news about "Joe Biden's inflation." That has a bigger impact than it's given credit for.

Here's an odd one. John Lott wrote a piece today claiming that the FBI has "quietly" revised their crime figures, and they now show that violent crime rose in 2022. This is all over the place on right-wing sites but hasn't been reported anywhere else, as near as I can tell.

Needless to say, this made me suspicious. And John Lott made me suspicious. But I downloaded the FBI's crime reports from 2022 and 2023 directly from their website, and sure enough: the FBI has revised all of its figures going back to 2016:

Most of the revisions are fairly small, and even the revision for 2022 isn't large. But the downward revision for 2021 was substantial, and that was enough to change the direction of the trend. Instead of being down -1.7%, violent crime was up 4.5%.

I'll add two things. First, the crime figures for 2021 are known to be unreliable for technical reasons, so no comparisons with 2021 should be taken too seriously in the first place. Second, the violent crime rate over the past decade has been pretty steady. There's just not much to see here for partisans on either side.

POSTSCRIPT: But for those of you who insist on some partisan spin, I've got you covered. The average annual number of violent offenses under Biden remains lower than it was under Trump: 1.224 million vs. 1.227 million. So there's that.