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The Build-Nothing Country [Noah Smith, Noahpinion]

By William McClain
In Noah Smith [Noahpinion]
February 27, 2023
419 views
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  • Money is not physical stuff: Just because you earmark money for a project doesn’t mean it will get built. Permitting, land use, and development regulations can hold up the process for years, and cost overruns can lead to inadequate physical projects.
  • NIMBYism: NIMBYs are holding up solar and wind projects, transmission lines, and housing construction due to their intrusions on scenic views and taking up a lot of space.
  • Supply-chain snags: The Biden administration’s crackdown on sourcing from China has caused supply-chain snags and long waits to connect to the grid.
  • Cost overruns: The Second Avenue Subway line is an order of magnitude more costly per mile than similar projects in Europe due to overuse of expensive consultants, overly large train stations, and poor coordination and pork-barrel spending by other city agencies.
  • Environmental review laws: California’s extra-strict environmental review law (CEQA) is being abused by local supporters of physical stasis to prevent housing construction.
  • TSMC: The Taiwanese company that recently agreed to build a big plant in Arizona is running into major cost issues due to construction costs being 4 to 5x greater for US fabs versus a fab in Taiwan.

Published February 27, 2023
Visit Noahpinion to read Noah Smith’s original post The Build-Nothing Country

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Repost: Much of what you’ve heard about Carter and Reagan is wrong [Noah Smith, Noahpinion]

By William McClain
In Noah Smith [Noahpinion]
February 22, 2023
297 views
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  • Carter was the one who beat inflation. He inherited a modest deficit from his predecessor and kept it at about the same level throughout his presidency, and appointed Paul Volcker as the Fed Chair, who raised interest rates to 17.61%, causing the first Volcker Recession in 1980.
  • Carter was the Great Deregulator, not Reagan. Despite Reagan’s fiery rhetoric, he passed only two pieces of deregulation during his two terms in office, while Carter passed seven major pieces of deregulatory legislation.
  • Reagan didn’t increase defense spending by much. In dollar terms, Reagan increased military budgets, but when adjusted for GDP, it looks much less impressive and was much lower than the military outlays of earlier decades.
  • The fall of the USSR is more complicated. The most convincing economic explanation for the Soviet collapse in the late 80s comes from Yegor Gaidar, a Soviet official who later became Prime Minister of Russia, who suggested that the Soviet economy collapsed due to the oil glut that began around 1985.
  • Lessons to take away. Successful policy takes a long time to work, American policy is driven less by ideology and presidential personality than we think, and presidential elections are not always as cataclysmic as we may think.

Published February 21, 2023
Visit Noahpinion to read Noah Smith’s original post Repost: Much of what you’ve heard about Carter and Reagan is wrong

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No-Landing and the Anti-gravity Economy [kyla scanlon, Kyla’s Newsletter]

By William McClain
In Kyla Scanlon [Kyla's Newsletter]
February 17, 2023
271 views
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  • Retail Sales increased the most in TWO years in January, driven by food services and dining, motor vehicles and people spending in general.
  • For inflation, The CPI print came in kind of hot with core services and goods continuing to rise, mostly driven by shelter costs.
  • The labor market is still strong, with people looking for cars and homes again.
  • The worry now is that there is a new normal of inflation, that it will just hang out around 4-5%.
  • The economy is still moving and grooving, but dancing to the wrong song.
  • The market believes that the Fed will continue its hiking journey, but financial conditions have loosened.
  • People are still spending money on vacations, despite vacation inflation.
  • People are so sick of Things, they don’t care anymore, a phenomena known as the yoloconomy.
  • The market wants to keep dancing, but the Fed is moving towards them quickly, slowly wagging their finger in the no-no motion.
  • The Fed rate hikes have not moved through the economy yet, due to the design of the 30Y fixed-rate mortgage.
  • People are spending more money because of credit card debt and continued dip into savings.
  • People are exhausted and want to consume passively.
  • The economy is booming despite the Fed’s pressure because people are prioritizing profit over people.

Published February 16, 2023
Visit Kyla’s Newsletter to read kyla scanlon’s original post No-Landing and the Anti-gravity Economy

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The Super Bowl Is an Economic Indicator [Derek Thompson, The Atlantic]

By Spencer Chen
In [The Atlantic]
February 12, 2023
245 views
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• The Super Bowl is a useful measure of which firms and sectors believe themselves to be the future of the economy, and can be used to detect bubbles.
• In 2000, 14 dot-com companies bought ad time in the Super Bowl, but the dot-com bubble had popped the next year.
• Last year, a cluster of crypto companies ran ads during the Super Bowl, but since then, crypto-asset values have crashed and several crypto firms have gone bankrupt.
• This year’s Super Bowl is going to feel a lot like 2019 or 2020, with Anheuser-Busch leading all firms with three minutes of airtime and other alcohol brands, M&M’s, Doritos, movie studios, and automakers also in.
• The yo-yo nature of the pandemic economy has caused many economic activities to go up and down, including gas prices, shipping costs, durable goods, savings rates, housing investment, and tech employment.
• The crypto bubble reflected in last year’s Super Bowl is a microcosm of the U.S. economy, and although the 2023 Super Bowl clearly represents a return to the old normal, the bursting of the crypto bubbles may presage the rise of a new digital economy.

Published February 12, 2023
Visit The Atlantic to read Derek Thompson’s original post The Super Bowl Is an Economic Indicator

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The Maryland Politician Who Is Arguing for a Four-Day Workweek [Caroline Mimbs Nyce, The Atlantic]

By Spencer Chen
In [The Atlantic]
February 11, 2023
280 views
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• Maryland State Capitol building is the only state capitol to have served as the nation’s capital.
• Maryland lawmaker Vaughn Stewart has proposed a four-day workweek bill to create a five-year experiment with $750,000 in tax credits for Maryland businesses.
• Stewart believes that the four-day workweek is the future and is connected to the original American dream of increased productivity and less work.
• The bill is supported by 92% of Americans and has attracted more attention than any of Stewart’s other bills.
• The bill is not without criticism, with some libertarians arguing that the state should not meddle in private businesses.
• Stewart believes that the bill is necessary to improve the quality of life for Marylanders and that it is not a large expense in the grand scheme of the state budget.

Published February 11, 2023
Visit The Atlantic to read Caroline Mimbs Nyce’s original post The Maryland Politician Who Is Arguing for a Four-Day Workweek

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The state of Bidenomics [Noah Smith, Noahpinion]

By Spencer Chen
In Noah Smith [Noahpinion]
February 9, 2023
273 views
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• Joe Biden gave a good State of the Union speech this week, focusing on economic policy rather than foreign affairs or culture wars.
• The U.S. economy is currently in a disinflationary boom, with high employment and fast wage growth, but low inflation.
• Biden deserves some credit for this, as he signaled confidence in the Fed Chair, eased sanctions on Venezuela, and reversed his restrictive approach to oil drilling.
• However, two years of high inflation have taken a bite out of wages and incomes, leaving some lasting scars.
• To boost wages and incomes, Biden can increase labor demand by pumping up investment, and increase labor’s bargaining power by passing the PRO Act and staffing federal agencies with pro-union people.
• Biden’s grand unified theory of Bidenomics includes three pillars: investment, cash benefits, and job provision in care industries.
• Biden has been pushing for investment to boost labor demand, but so far there has been no investment boom.
• The U.S. is facing delays and high construction costs that are preventing investment from happening.
• Biden needs to tackle the basic problem of stymieing investment, not just spend more money.
• To boost wages and incomes, Biden can increase labor demand by pumping up investment, and increase labor’s bargaining power by passing the PRO Act and staffing federal agencies with pro-union people.

Published February 9, 2023
Visit Noahpinion to read Noah Smith’s original post The state of Bidenomics

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Don’t Read His Lips [James Surowiecki, The Atlantic]

By Spencer Chen
In [The Atlantic]
February 8, 2023
264 views
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• Jerome Powell, the chairman of the Federal Reserve, spoke last week after the Fed’s monthly meeting, conveying the message that the fight against inflation was not yet won and that the Fed anticipated continuing to raise interest rates over the next few months.
• Investors ignored Powell’s message and leaped to the conclusion that the Fed was no longer as hawkish as it had been, sending stocks soaring.
• When Powell spoke yesterday at the Economic Club in Washington, D.C., he wanted to make sure that no one missed the point and reiterated that the process of getting inflation down would be “bumpy” and was likely to take “quite a bit of time”.
• Until 1994, the Fed didn’t even announce at its monthly meeting whether it had raised or lowered interest rates.
• Alan Greenspan, Ben Bernanke, Janet Yellen, and Jerome Powell have all been open about their thinking and have moved steadily toward more transparency and public communication about their policies.
• The job of central bankers has changed and they now have to be good at communicating without any real rule book.
• Powell did a fine job of explaining that the Fed was sticking with its target of 2 percent inflation, and that, as a result, it planned to keep hiking interest rates.
• However, the market rallied strongly, and by day’s end it was up by more than a percentage point.

Published February 8, 2023
Visit The Atlantic to read James Surowiecki’s original post Don’t Read His Lips

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The US Labor Market Was Stronger Than We Thought [Joseph Politano, Apricitas Economics]

By Spencer Chen
In Joseph Politano [Apricitas Economics]
February 4, 2023
277 views
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• US added more than half a million jobs in January, exceeding consensus forecasts and notching the largest monthly increase in nonfarm payrolls since July.
• Revisions to growth over the last year represent the largest sign of strength in the labor market.
• Employment has now more than fully recovered in all major industry groups except Leisure & Hospitality and Government.
• Wage growth continues to decelerate, with private industry wages growing 5.1% over the year ending in Q4 and average hourly earnings for private-sector workers growing 4.4% over the year ending in January 2023.
• Unemployment rate has sunk to its lowest level since 1969 and prime-age employment rates remain just 0.4% below pre-pandemic peaks.
• Sectors that had demand pulled forward during the early pandemic—tech, transportation, warehousing, homebuilding, and manufacturing—are holding up better than previously thought.
• The share of working-age adults with a job is still slightly below the 80.6% notched just before COVID, significantly below the 81.9% achieved in the late 1990s.
• Comprehensive data on wages and benefits from the Employment Cost Index shows wage growth decelerating significantly over the last two quarters.
• Chair Powell and the FOMC acknowledged the start of disinflationary process at their meeting this week, stressing that they don’t believe they have done enough to contain inflation yet.

Published February 4, 2023
Visit Apricitas Economics to read Joseph Politano’s original post The US Labor Market Was Stronger Than We Thought

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The Economy Is Still Very, Very Weird [Derek Thompson, The Atlantic]

By Spencer Chen
In [The Atlantic]
February 3, 2023
266 views
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– The US economy has been in a state of “weirdness” since the start of the coronavirus pandemic.
– This has been characterized by a “yo-yo economy” of historic highs and lows in various industries.
– Examples include gas prices, durable goods, used cars, savings, housing, tech, and microchips.
– The pandemic has caused a mismatch between supply and demand, with companies struggling to anticipate and satisfy consumer preferences.
– The legacy of the yo-yo economy could be profound, with the Biden administration embracing policies to make America stronger, richer, greener, and less reliant on supply chains.

Published February 3, 2023
Visit The Atlantic to read Derek Thompson’s original post The Economy Is Still Very, Very Weird

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TikTok’s CoreCore and the Federal Reserve [kyla scanlon, Kyla’s Newsletter]

By Spencer Chen
In Kyla Scanlon [Kyla's Newsletter]
February 2, 2023
258 views
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• The article discusses the current balancing act of the Federal Reserve and the 6 things they must pay attention to.
• It also looks at the trend of corecore on TikTok, which is a reflection of the Internet on the Internet and a message against capitalism and income inequality.
• The Fed is charged with creating aspects of financial nihilism right now, and is looking at wages, labor market, and economic growth to slow inflation.
• Data points show a slowdown in manufacturing, labor market, and wages, but no recessionary warning signals.
• The Fed wants the market to take it seriously, but markets often lose the plot.
• The article concludes that people are the economy, and the Fed is paying attention to the right things.

Published February 2, 2023
Visit Kyla’s Newsletter to read kyla scanlon’s original post TikTok’s CoreCore and the Federal Reserve

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