Those Stubborn Facts: Whose Administration was Most Pro-Worker?

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cost of living, Donald Trump, economy, inflation, inflation-adjusted wages, Joe Biden, Those Stubborn Facts, wages, weekly wages, workers

After-Inflation Private Sector Average Weekly Wages During First 3 Trump Years: +2.81 percent

After-Inflation Private Sector Average Weekly Wages During First 3 Biden Years: -3.39 percent

(Source: Average weekly earnings of all employees, 1982-84 dollars, total private sector, seasonally adjusted, Employment, Hours, and Earnings from the Current Employment Statistics survey (National), Databases, Tables & Calculators by Subject, U.S. Bureau of Labor Statistics)

Glad I Didn’t Say That! Does the U.S. Treasury Have Its Act Together on China?

Tags

China, decoupling, deglobalization, Glad I Didn't Say That!, Janet Yellen, Treasury Department, Wally Ademayo

“We do not seek to decouple our economy from China’s. This would be damaging to both the U.S. and China and destabilizing for the world.”

– Treasury Secretary Janet Yellen, November 10, 2023

“I am not concerned about the headwinds from China having a large impact on the US economy.”

– Deputy Treasury Secretary Wally Adeyemo, February 23, 2024

(Sources: “Yellen Says U.S. Wants ‘Healthy’ Economic Ties With China,” by Alan Rappeport, The New York Times, November 10, 2023, Yellen Says U.S. Wants ‘Healthy’ Economic Ties With China, The New York Times (nytimes.com) ) and “China’s woes won’t slow US economy, but excess capacity a concern, says Treasury’s Adeyemo,” by David Lawder, Reuters, February 23, 2024, China’s woes won’t slow US economy, but excess capacity a concern, says Treasury’s Adeyemo | Reuters)

Our So-Called Foreign Policy: Trump’s Disturbing NATO Rant

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alliances, allies, burden-sharing, deterrence, Europe, foreign policy, national security, NATO, North Atlantic treaty Organization, nuclear deterrent, nuclear umbrella, Our So-Called Foreign Policy, Russia, Trump

Full disclosure: For literally decades (can I be that old?), I’ve strongly favored a phase out of the longstanding U.S. defense (and especially nuclear defense) guarantee that has stood at the core of the North Atlantic Treaty Organization (NATO) since its founding in 1949. Yet even so, for two main reasons, I’ve been appalled by Donald Trump’s recent remarks on the alliance.

First, there’s the issue of timing. With a major land war launched by Russia still raging on the borders of NATO’s eastern-most (and newest) members, this couldn’t be a worse moment for anyone to reveal, as Trump divulged at a campaign rally last week, that:

“One of the presidents of a big [NATO] country stood up and said, ‘Well, sir, if we don’t pay and we’re attacked by Russia, will you protect us? I said, ‘You didn’t pay. You’re delinquent.’ He said, ‘Yes, let’s say that happened.’ No, I would not protect you. In fact, I would encourage them [Russia] to do whatever the hell they want.”

It’s true that Trump didn’t say that he’d do this now. But let’s be real. Not only was it close, but it’s hard to believe that Trump didn’t realize this. And at a time when the current situation is plenty explosive enough, including the possibility that the Ukraine war spills over onto a NATO country by accident, his words were just inexcusably reckless.

Second, an arguably even more serious charge can be leveled against the former president’s remarks: They were completely unnecessary. There’s absolutely no evidence that Trump’s popular support has ever been boosted by his repeated and harsh (and in my opinion, completely justified) criticisms of defense free-riding by most NATO members. It’s also admittedly tempting to force the worst deadbeats to pay the worst consequences by singling then out for total U.S. withdrawal (although geography alone will surely doom any chances of protecting certain countries but not their next-door neighbors).

But why on earth would anyone brag that they’d actively encourage unprovoked aggression by Russia (or by any country)? It’s one thing to argue that the United States would be more secure if it didn’t defend so many countries (like Ukraine, in my opinion) whose fate has always been marginal to America’s against a nuclear-armed power. Yet how does encouraging Russia to do whatever the hell they want advance or defend any important U.S. Interests? In fact, how can it benefit the United States when this aggression would take place in close proximity to a region (Western Europe) whose fate might not be worth risking a nuclear war, but that can’t be responsibly viewed with indifference?

Indeed, these last questions must be asked even by those who insist that Trump’s remarks are just an ace negotiator’s ploy. Lots of consequences for the free-riders could have been listed other than encouraging Russia to attack them. For example, he could have imposed tariffs on the worst deadbeats that numerically would be somehow connected mathematically to the degree that they’ve fallen short of official NATO spending targets that they all agreed to reach years ago (after decades of vaguer U.S. efforts and feebler allied responses that stretch back practically to the alliance’s founding decades ago, as I documented here). And he could still have described the deadbeats them in harshly insulting language.

Finally, Trump’s remarks represented a massively blown opportunity to explain exactly why pervasive NATO free-riding is so important – and in fact outright dangerous for the United States. Sure, it would be nice to have an entire crew of genuine, cooperative allies rather than a group dominated by miserly protectorates.

But however appealing and warranted fairness claims might be, they count for little at best compared with the national security consequences of this long-time situation. Precisely because so many NATO allies – including big, wealthy ones like Germany – spend so little on defending themselves with conventional forces against a nearby adversary they insist they’ve been worried about for decades, the United States was forced to protect them in large measure by brandishing its nuclear arsenal against a power with formidable nuclear forces of its own.

Clearly, this nuclear umbrella helped keep the peace in Europe long after the end of World War II, But at first, the Europe allies and their economies were suffering from wartime devastation. Decades later, that’s obviously far from the case. Yet widespread allied defense skimping is still exposing the American homeland to nuclear attack.

If Trump had made this connection, his comments on NATO (absent the completely gratuitous Russia aggression threat) certainly would have been seen even by some alliance stalwarts as a trenchant observation deserving of much more discussion, rather than a penny-wise, pound-foolish rant. And voicing his critique in a set speech systematically laying out his critique of how globalist security policies have been applied in Europe could have benefited his presidential run even more.

But he made these points in a rant at a campaign rally that was no doubt purely spontaneous and unvetted. After some point, wracking up own-goals is no way to run a campaign for the most important job in the world. And it’s a far worse way for the holder of that job to run the nation’s foreign policy in an increasingly dangerous era+.

(What’s Left of) Our Economy: The Real Private Sector Keeps Shrinking As A Job Creator

Tags

Employment, government jobs, healthcare services, Jobs, jobs report, private sector jobs, public sector jobs, real private sector, subsidized private sector, {What's Left of) Our Economy

Last Thursday’s official U.S. jobs report was a big deal not only because the monthly payroll growth for January of 353,000 was nothing less than double most expectations. It also included the latest revisions, some of which once more highlighted a trend that RealityChek has long been following: the greatly shrunken role of industries that deserve to be called “private sector” (PS) as engines of employment growth, and the burgeoning role of government and what I’ve been calling the “subsidized private sector” (SPS).

This category features industries (especially health care services) officially classified as private sector, but that depend so heavily on government subsidies for growth and employment that this label simply doesn’t look deserved.

Moreover, the new jobs report shows that the importance of the SPS and the government proper surged especially powerfully last year. As I’ve noted repeatedly, this can’t be good news for anyone who believes (as everyone should) that durable American prosperity is best achieved by sectors of the economy dominated by market forces, rather than sectors dominated by politicians’ decisions.

One easy way to understand this change is to compare the national employment picture of 2022-23 with that of 2018-19 – the last full year before the CCP Virus wreaked havoc with both the economy itself and with the data it generated.

Back in 2019, the Labor Department reports that the private sector as the government has been defining it accounted for fully 89.19 percent (1.733 million) of that year’s total employment increase of 1.988 million. In addition, PS jobs conventionally defined represented 85.03 percent of the non-farm workforce (the Labor Department’s U.S. employment universe) on a stand-still basis. So these figures portray a national jobs market in which market forces are solidly in the driver’s seat.

But if the SPS is subtracted, the 2019 workforce in what might be called the real private sector (RPS) came to only 68.93 percent of all U.S. workers. That’s more than twenty percentage points less than the private sector conventionally defined. And that RPS’ growth was only 58.05 percent of the total workforce’ growth versus the 89.19 percent attributable to the conventionally defined private sector. Moreover, in 2019, the SPS expanded much faster (2.43 percent over 2018) than the conventionally defined PS (1.39 percent) or the entire workforce (1.33 percent).

At the same time, this disproportionate growth came even though the SPS in 2018 accounted for just 15.92 percent of the total workforce while the conventionally defined PS represented 84.97 percent and the RPS 64.81 percent. From another angle, despite its 15.92 percent share of the 2018 workforce on a static basis, the SPS generated 29.12 percent of the total 2018-2019 employment gain and 33.41 percent of the increase by the conventionally defined private sector.

Government employment in 2019, by contrast, underperformed. It represented 15.02 percent of the nation’s total 2018 workforce, but over the next year, its ranks rose by only 10.81 percent of all job gains.

Finally, when the government and the SPS are combined, they came to 30.94 percent of all U.S. Jobs in 2018. But between 2018 and 2019, they generated nearly 40 percent of the total employment increase.

In 2022, the official jobs figures show, the PS conventionally defined represented 85.50 percent of all U.S. Jobs – a level just slightly higher than that for 2018. Subtract the subsidized private sector, however, and this level drops to 69.45 percent – but this level is also scarcely changed from 2019’s.

Yet from 2022-23, the conventionally defined PS from 2022-23 spurred 77.49 percent of the nation’s overall employment growth. That number is significantly lower than that for 2018-19 – 89.19 percent. Yet when the SPS is subtracted, the growth contribution of the remaining real private sector sinks to just 42.87 percent – in other words, less than half of all the economy’s payroll increase, and much lower than that 58.05 percent figure of 2018-19. Meanwhile, the SPS itself is shown to have generated 34.62 percent of the economy’s total employment growth. And the overperformance was stunning, because the year before, the SPS came to just 16.06 percent in 2022 of total jobs on a standstill basis.

Accordingly, the absolute SPS’ increase from 2022-23 (4.27 percent) was much greater than that of the entire workforce (1.33 percent), of the real private sector (1.22 percent), and of the conventionally defined private sector (1.79 percent).

Moreover, government itself was the next fastest growing job category between 2022 and 2023, expanding at 3.08 percent.

The result was a total domination of 2022-23 job creation by government and government-dependent jobs – which together grew at a robust 3.70 percent (nearly three times faster than the total job creation rate of 1.33 percent), and accounted for fully 57.13 percent of the total expansion of payrolls last year. And the real private sector’s share was down to 42.87 percent – significantly lower than 2019’s 58.05%..

Interestingly, on a monthly basis, the latest official jobs report (which presents data that it still preliminary) shows something of a break in this pattern. Of the 353,000 new jobs the economy added from December to January, 317,000 (89.80 percent) were credited to the conventionally defined private sector.

The 112,000 jobs created by the SPS and the 36,000 created by government do represent 41.93 percent of total job creation for the month. But that still means that the real private sector share rebounded to 58.07 percent. One month hardly a trend makes, but so far these figures amount to another reason for viewing the January jobs report as a standout.

(What’s Left of) Our Economy: A Banner Year for U.S. Trade Flows

Tags

Advanced Technology Products, ATP, China, exports, goods trade, imports, Made in Washington trade deficit, manufacturing, non-oil goods, services trade, Trade, trade deficit, trade surplus, {What's Left of) Our Economy

Today’s official U.S. trade report, which covered both the month of December and the entirety of 2023, was full of excellent news for the U.S. economy. Especially noteworthy was the huge (18.76 percent) drop in the annual deficit last year – the biggest such fall-off since the gap nearly halved during the Great Recession year 2009 – even though 2023 economic growth was strong. Moreover, the 2023 level of $773.43 billion was the lowest since the $652.88 billion of CCP Virus year 2020.

Nor did that excellent trade news stop there by any means. The closely watched, still huge goods trade shortfalls with China, in manufacturing, and in advanced technology all showed major improvement, too. So did a less closely watched but crucial indicator – the non-oil goods deficit, which reveals the trade gap resulting largely from free trade deals and other U.S. trade policy decisions.

The major drop in the overall deficit stemmed in part from a new record in goods and services exports – which climbed 1.16 percent from the previous all-time high of $3.018 trillion to $3.053 trillion. And part resulted from a 3,60 percent decline in overall imports, from 2022’s record $3.970 trillion to 3.827 trillion.

The goods deficit fell from 2022’s record $1.183 trillion to $1.062 trillion – also the lowest level since 2020. And the services surplus jumped by 21.32 percent, from $232.82 billion to $288.24 billion. That figure was the second best ever (after 2018’s $300.16 billion) but the increase was the greatest since 2011’s 28.08 percent.

One cautionary note should be made, however. All of the above improvements followed long stretches of worsening trade balances. So it remains far from clear whether the nation’s trade picture has entered a genuinely better phase.

Turning to the narrower trade balances, the longstanding and still enormous goods deficit with China last year tumbled to its lowest level ($279.42 billion) since 2010 ($273.04 billion), early during the recovery from the Great Recession. Further, the 26.91 percent nosedive was the biggest on record in an official data series going back to 1985.

U.S. Goods exports to China decreased by 4.03 percent in 2023, to $147.81 billion from $154.01 billion. The new total was the lowest since CCP Virus year 2020’s $124.81 billion. Goods imports from China sank by 20.34 percent, from $536.31 billion to $427.23 billion – a tumble that was the biggest ever.

The manufacturing sector enjoyed a good trade year, too – at least relatively speaking. The chronically towering deficit shrank in absolute terms (from $1.500 trillion in 2022 to $1.386 trillion) for the first time since the Great Recession year 2008 (when it dropped from $611.67 billion to $578.00 billion.

Manufacturing exports slipped by 0.44 percent, from $1.294 trillion to $1.288 trillion. But manufacturing imports fell by much more – by 4.26 percent, from $$2.7931 trillion to $2.6740 trillion).

In Advanced Technology Products (ATP), the deficit in 2023 shrank for the first time since 2016. The improvement of 9.79 percent (from $242.70 billion to $218.93 billion) was the biggest since 2013’s 10.78 percent.

ATP exports increased 6.94 percent from a record $391.05 billion to a new all-time high of $418.22 billion. Imports also hit a second straight new record ($637.15 billion) but inched up just 0.53 percent, from $633.79 billion.

Also dropping year-on-year was the trade gap in non-oil goods – which can be considered the “Made in Washington trade deficit” because of its close connection with U.S. trade policy. Last year, the shortfall narrowed for the first time since 2017, declining by 8.26 percent, from $$1.193 trillion to $1.095 trillion.

Non-oil goods exports fell in 2023 for the first time since 2020 (from $1.758 trillion to $1.746 trillion) but this 0.67 percent decrease was dwarfed by the 3.74 percent drop in non-oil imports, from $2.951 trillion to $2.841 trillion. This decrease was also the first since 2020.

On a monthly basis, the total trade deficit in December climbed by 0.51 percent, from $61.88 billion to $62.20 billion. One curiosity here, though – the November shortfall was revised down by a large 2.09 percent, from $63.21 billion.

The goods deficit worsened by 0.78 percent, from $88.39 billion to $89.08 billion. And the services surplus rose by 1.40 percent to a new record $26.87 billion. This total broke the old mark of $26.51 billion, set in January, 2018.

Combined goods and services exports advanced by 1.54 percent, from $254.33 billion to $258.25 billion. Goods exports alone were up 1.84 percent, from $168.14 billion to $171.23 billion, and their services counterparts reached their fifth consecutive all-time high, improving by 0.97 percent, from $86.13 billion to $87.02 billion.

Total imports rose, too, in December, by 1.34 percent, from $316.21 billion to $320.45 billion. Goods imports increased even more, by 1.55 percent, from $256.53 billion to $260.30 billion, and services imports worsened by just 0.78 percent, from $59.68 billion to $60.15 billion.

The goods trade gap with China widened by 2.28 percent on month in December, with the rise from $21.59 billion to $22.09 billion the first on a sequential basis since September.

U.S. goods exports to China slumped by 13.64 percent on month in December, from $13.90 billion to $12.01 billion. That total was the lowest since September’s $11.83 billion and the decrease the biggest since May’s 16.53 percent.

America’s goods imports from China dropped, too, but by just 3.95 percent, from $35.49 billion to $34.09 billion. Yet the December figure was the lowest since April’s $33.08 billion.

The December manufacturing deficit of $107.76 billion represented an 8.39 percent decrease from November’s $116.15 billion and the lowest monthly total since last February’s $100.05 billion.

Manufacturing exports in December improved by 1.99 percent, from $104.39 billion to $106.47 billion, while imports were off by 2.86 percent, from $220.53 billion to $214.22 billion.

Even better were the ATP trade figures. In December, the gap narrowed for the second straight month, from $21.25 billion to $17.95 billion. The fall-off of 15.52 percent was the biggest since November, 2022’s 19.87 percent, and the monthly total was the lowest since last June’s $17.22 billion.

ATP exports advanced by 2.71 percent, from $36.00 billion to $36.97 billion – the second highest total on record after September’s $37.11 billion. ATP imports, however, sagged from $57.24 billion to $54.92 billion. This 4.06 percent decrease brought the deficit to its lowest level since September’s $57.56 billion.

The non-oil deficit edged up by 1.44 percent in December, from 89.53 billion to $90.82 billion. These Made in Washington exports improved by 1.61 percent, from $141.71 billion to $145.01 billion, while imports were up by 1.48 percent, from $232.24 billion to $235.83 billion.

(What’s Left of) Our Economy: Has U.S. Labor Productivity Really Started To Boom?

Tags

artificial intelligence, Labor Department, labor productivity, productivity, {What's Left of) Our Economy

Numerous students of the economy concluded from last Thursday’s official report on U.S. labor productivity that the nation is on the verge of – or even already experiencing – a major improvement in this key measure of economic efficiency and engine of sustainable (not bubble-y) prosperity. (See e.g., here and here.)

They’ve even advanced a reason that arguably passes the eye test: The surging adoption of artificial intelligence is enabling businesses to do much more with much less in the way of payrolls or hours workers are on the job – the definition of labor productivity growth.

My conclusion: Hold your horses.

Not that these preliminary figures weren’t encouraging. It’s just that even by recent standards (especially before most of ever heard of ChatGPT), they don’t look like an especially big deal.

On a quarter-to-quarter basis, labor productivity in the last quarter of last year rose by an excellent 0.79 percent. And this result followed an even stronger third quarter gain of 1.19 percent – the highest outside a recession since 2003 – and another encouraging improvement of 0.88 percent in the second quarter.

But in 2019, the quarterly advances were one percent, 0.90 percent, 0.88 percent, and 0.79 percent – practically the same as the 2023 performance. (During the peak pandemic year of 2020, dominated by a brief but punishing recession, labor productivity surged. But that’s typical of economic downturns, and the CCP Virus slump was way beyond typical and wreaked havoc with virtually all economic data.)

In addition, although the fourth quarter of 2023 saw the fourth straight increase in productivity growth (capping a period when the cumulative improvement was 2.89 percent), but there’s a recent precedent for that performance, too. The stretch between the fourth quarter of 2018 and the fourth quarter of 2019. And then, cumulative productivity growth came to a stronger 3.48 percent.

Perhaps most important, nothing about the newest report, or the previous release, suggests that the big decades-long slowdown in productivity growth is even close to ending.

Here are the figures for the last few economic expansions (based on apples-to-apples data that yield the most reliable comparisons): 

1990s expansion (2Q 1991-1Q 2001): +25.53 percent

bubble expansion (4Q 2001-4Q 2007): +16.03 percent

pre-CCP Virus expansion: (3Q 2009-4Q 2019): +13.77 percent

post-CCP Virus expansion: (3Q 2020-4Q 2023): +0.43 percent

In other words, since the economy’s rebound from the pandemic downturn, labor productivity has barely grown at all. So let’s wait till there’s an upsurge that’s at least close to improvements with lots of precedents before even thinking about a labor productivity boom. 

Those Stubborn Facts: A Little Known Reason Ukraine’s War Effort Is Wheezing

Tags

draft, geopolitics, military, Those Stubborn Facts, Ukraine, Ukraine War

Average age of Ukraine’s soldiers today: Over 40

Ukraine’s minimum draft age: 27

(Source: “Zelensky’s shake-up of military command, meant as a refresh, risks backlash,” By Isabelle Khurshudyan and David L. Stern, The Washington Post, February 1, 2024, Zelensky’s shakeup of military command, meant as a refresh, risks backlash – The Washington Post )

(What’s Left of) Our Economy: A Blue Skies U.S. Manufacturing Jobs Report

Tags

appliances, artificial intelligence, automation, Biden adminisration, chemicals, electric vehicles, electrical equipment, Employment, Federal Reserve, furniture, green manufacturng, interest rates, Jobs, Labor Department, manufacturing, NFP, non-farm payrolls, paper, printing, semiconductors, tariffs, transportation equipment, {What's Left of) Our Economy

Domestic manufacturing employment started out the new year on an encouraging note, with the Labor Department’s monthly jobs release reporting that industry added 23,000 positions sequentially. In fact, not only was this total the best since October, 2022’s 31,000. It was higher than the entire manufacturing jobs increase for 2023 (22,000).

Revisions were positive, too, with December’s gain upgraded from 6,000 to 8,000, and that annual 2023 figure nearly doubled from the initially reported 12,000.

As a result, the new report shows that manufacturing employment in January of 12.979 million is the highest absolute level since November, 2008’s 13.034 million.

But as a share of total non-farm payrolls (NFP, the U.S. government’s definition of the national employment universe), manufacturing jobs represented just 8.23 percent in January, and their share of private sector employment was 9.4 percent. In November, 2008, the manufacturing share of total NFP was 9.62 percent, and of total private sector employment 11.54 percent.

Incidentally, however, these comparisons point to an awfully interesting, largely overlooked conclusion: The fact that manufacturing’s share of total private sector employment has dipped so modestly over the past 15 or so years, and so much greater as a share of total NFP, indicates how greatly public sector job totals have swelled during this period.

January’s biggest monthly manufacturing jobs winners among the broadest Labor Department groupings below the two super-categories of durable and non-durable goods were:

>chemicals, where payrolls grew by 6,900 –their best performance ever (at least going back to their official data series beginning in 1990);

>transportation equipment, which saw an employment increase of 5,600; and

>printing and related support activities, whose 5,100 advance was its highest sequential jump since the 19,500 burst recorded in May, 2020, during the economy’s snapback from the short but deep CCP Virus-induced recession.

January’s biggest monthly manufacturing jobs losers were:

>Furniture and related products, which shed positions for the seventh straight month and whose 2,900 job cuts were its worst performance since last May’s 6,400;

>electrical equipment, appliance, and components manufacturing, where payrolls dropped by 2,600 for these sectors’ largest setback since last June’s 3,500; and

>paper manufacturing, where employment’s 1,800 sequential decline was the largest since September’s 2,200.

At this point, the reasons for optimism about manufacturing employment seem to outweigh strongly those for concern, much less outright pessimism. Chiefly, a major factory building boom has already been ignited by the overall economy’s continued strong growth, by the huge sums approved in Washington, D.C. for new domestic investment in sectors like semiconductors and green energy products, and by the Buy America-type strings attached to these measures.

Obviously, not all of these new projects will pan out. Yet even if the federal government’s batting average is just half decent, the new plants will keep spurring demand for manufactured inputs (construction materials, machinery, etc.) and soon begin cranking out large quantities of both intermediate goods that other manufacturers at home and abroad will be buying, as well as final products for consumers.

And don’t forget that the hundreds of billions worth of tariffs first imposed by former President Donald Trump and overwhelmingly kept in place by President Biden keep shielding American industries from predatory foreign trade practices.

The spreading use by manufacturers of artificial intelligence and other forms of advanced automation will restrain employment increases (though surely not greatly in the short term at least). So will some of the distinctive features of the green products (like the smaller number of parts used – and therefore workers needed – by electric vehicles versus the conventionally powered).

Moreover, if inflation heats up again, the Federal Reserve could keep interest rates high for even longer, as Chairman Jerome Powell has put it, thereby crimping the supply of private capital. And of course, many of the pandemic-era stimulus programs will be running out this year, thereby crimping consumer demand.

But right now, I’m skeptical that any of these actual and potential obstacles will prove big enough to darken the manufacturing outlook any time soon. What say you readers?

(What’s Left of) Our Economy: Government Jobs Are Now The U.S. Wage Champions, Too.

Tags

ECI, economy, Employment, Employment Cost Index, government, Jobs, private sector, public sector, {What's Left of) Our Economy

The release yesterday by the Labor Department of the Employment Cost Index (ECI) once again understandably focused attention on perhaps the two leading intertwined economic and political and economic questions of this year.

First, in after-inflation terms, has this comprehensive measure of worker compensation (which includes wages, salaries, and benefits) recovered enough since tanking in the first half of 2022 to help Americans better keep up with more slowly rising living costs? If it has, and if the trend continues, will enough voters give President Biden enough credit to strengthen his reelection chances?

Here I’ll concentrate on another question that’s generally economic (though not without a political angle): Which groups of workers have been benefiting most and least? The following figures should make clear that the answers are far from ideal for anyone hoping for an American prosperity built on a sustainable basis. For mirroring some other recent trends, the answer is “government workers.”

Improvement has undeniably been made over the past year for U.S. Workers overall. The ECI’s broadest grouping is called “civilian workers” (which includes government workers at all levels except for the military, along with private sector workers), and between the third quarter of last year and the fourth quarter, this compensation advanced from 0.6 percent to 0.9 percent at yearly rates.

For the private sector alone, however, the latest annual increase was just from 0.6 percent to 0.7 percent. For some reason, the ECI leaves out federal government civilian workers, but for state and government workers, the yearly gain was from one to 1.3 percent.

Public sector employees (at least in the state and local government sectors) have fared considerably better than their private sector counterparts during the entire Biden administration, too. In fairness, they started out further behind the eight ball. Their ECI fell on an annual basis by 0.6 percent in the first quarter of 2021 – Mr. Biden’s first full quarter in office. In the fourth quarter of 2023, this rate climbed to the aforementioned 1.3 percent.

Between the third and fourth quarter of last year, the private sector ECI ticked up only from an annualized 0.6 percent to an annualized 0.7 percent – a pace slower than for both civilian workers overall and for state and local government workers.

During the entirety of the Biden presidency so far, the annual increase in the private sector ECI improved by much less than it did for either the whole civilian sector or for state and local government workers – from 0.2 percent to 0.7 percent.

As RealityChek regulars could well recognize, these outsized pay gains for the public sector mirror the increasingly disproportionate role in job creation being played by government employment and employment classified as private sector but heavily dependent on government spending. (See, e.g., here.) Obviously, many and even most such jobs are important and even essential. But the recent data can’t help but raise the questions of whether the economy can have too much of a good thing, and why in the nation’s main engine of productivity and innovation, wage and employment hikes are lagging.

(What’s Left of) Our Economy: A Big Inflation & Politics Mystery Solved?

Tags

Biden, Bidenomics, Catherine Rampell, consumer price index, core CPI, core PCE, cost of living, CPI, election 2024, Federal Reserve, inflation, Paul Krugman, PCE, Personal Consumption Expenditures Price Index, pundits, Republicans, {What's Left of) Our Economy

Here are two numbers that should be key to resolving an intensifying, crucial economic and political debate – over why so the polls show that most Americans keep giving the Biden administration such lousy economic grades even though the torrid inflation marking its term has become decidedly less torrid.

They’re 13.45 percent and 14.19 percent and they represent a major – and perhaps the most important – measures of how much U.S. prices have climbed in total since Mr. Biden’s first full month as President in February 21. That is, they tell us the cumulative loss of purchasing power Americans have suffered since his administration began.

And in the process, they reinforce an argument that’s been largely ignored by an unusually wide range of analysts. These include pundits who are all but open shills for Bidenomics (New York Times columnist, and Nobel Prize winning economist Paul Krugman, and the Washington Post‘s Catherine Rampell readily come to mind); to academic economists (who like most scholars are pretty pro-Biden themselves, especially if they’ve served in Democratic administrations).

Their explanations tend to focus on Mr. Biden’s ineffectiveness as a communicator, on the hyper-partisanship of Republicans who for purely political reasons refuse to give the administration any credit for any accomplishments (especially during an election year), and (something that’s clearly ROTFL funny) relentlessly negative press coverage that keeps battering the President.

Pushback to this narrative, including mine, stresses the total Biden inflation rate since President Biden took office out of confidence that how badly the electorate’s living standards have actually dropped in absolute terms since the President took office is what’s really (and understandably) stuck in voters’ craws – not whether price increases have slowed month-to-month or year-on-year.

Not that impressive statistical evidence for this proposition has been MIA. It’s easy to go onto the Labor Department’s website each month and track the widely followed Consumer Price Index (CPI) and see how it’s surged or tumbled or remained stable over varying periods of time, including very long ones.

From February, 2021 through last month’s official reading, the headline number is up by 17.15 percent, which of course includes the uptick in inflation-adjusted wages of the last few months. The core inflation reading has risen by a better 15.69 percent. That’s the measure that strips out food and energy prices supposedly because they’re too volatile to gauge accurately the economy’s main, underlying inflation trends. But of course, they’re both irreplaceable staples of human existence, so because this is a political as well as economic analysis, their overall decreased affordability can’t help but linger with special prominence in voters’ minds.

But the two other figures mentioned at the start are special because they represent the cumulative living standards loss according to the Commerce Department’s Personal Consumption Expenditures (PCE) Price Index. And the PCE is the favored inflation metric of the Federal Reserve, Washington’s main inflation-fighting agency.

Its cumulative inflation measures unfortunately aren’t published anywhere official (at least not that I can find). But using a little simple math, they can be calculated by adding up the published annual numbers. And they show that under President Biden, headline inflation has worsened by 14.19 percent, and core inflation by 13.45 percent.

They’re smaller bites from living standards, but by any measure, they’re still awfully big. Moreover, don’t forget: All measures of PCE and CPI show that inflation is still rising in absolute terms, and that the typical American individual and household keep falling behind economically. So maybe voters’ views of the cost of living, along with inflation and Bidenomics, aren’t so mysterious after all?