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Economics 101
Justin Wolfers is an economist at the Gerald R. Ford School of Public Policy at the University of Michigan and also teaches at their School of Economics. Today, he tweeted this:
What he wants you to know is that Bidenomics are great, and what are you complaining about?
Well, teaching at a public university kind of insulates you from the pain, doesn’t it? According to the publicly available U of M budget, Wolfers makes $152,860 from the Ford School and another $147,750 from the School of Economics. His “domestic partner,” Betsy Stevenson, also rakes in $246,739 from the Ford. She was also Chief Economist of the Department of Labor under Barack Obama. (Wolfers and Stevenson boast that they won’t marry for tax purposes.)
You know, if my wife and I “earned” over $547K a year we probably wouldn’t visibly shudder every time we go through the grocery store checkout. I believe that’s called “rich-splainin’.”
I prefer the old saying that ends with “and the horse you rode in on.”
Published in General
The time scale on the graph is not the pandemic. It’s Biden policies taking effect.
There’s a bit from the great animated show “The Critic” where boss Duke Philips decides to run for President and says he’s on the side of the average guy making $400,000 a year.
And that was back in ’94.
Inflation is cumulative. Todays 3.7% stands on the shoulders of last year’s 9.1 which stands on the shoulder’s on the 3% the year before that. Since Biden was inaugurated, consumer prices are up 16.6%
Below is CPI. I’ve re-centered it so Jan 2021 is 100. Today it stands at 116.6
So while the rate of increase has slowed, we are still living with the legacy of last years 9%.
Even 16.6% is official government crapola. Real prices in real stores on many real things that real people buy, are up 50% and more. Gas may not be over $5 still in some places, but it might still be double or more the pre-FJB prices.
Centering 100% at January 2021 isn’t quite right either, energy prices for example started rising immediately after election day! They knew what was coming.
So this fellow is correct about inflation having come under control, and you don’t like that, so you’re going to point out that he’s fairly wealthy?
What does his financial success have to do with the facts?
I understand that a number of people here don’t like the economic data right now, with inflation back down, employment up, and unemployment down. It’s not the economic catastrophe that some people would like to see, in order to blame President Biden.
It’s possible that we’ll have an economic downturn soon. It’s difficult to predict either inflation or unemployment. But at the moment, the economic news is pretty good.
Compared to what? You don’t seem to acknowledge – could you actually be unaware? – that just because the inflation RATE has come down, prices don’t go back down, they remain where they left off. Much higher than before. And it’s simply a fact that wealthy/highly-paid elites don’t notice that as much. An income over $500k likely puts them in the top 1%.
All the cheerleading in the world is not going to change the fact that a majority of people are having a hard time putting the same quality and quantity of food on the family table. His “success” insulates him from that. So to go around telling people things are great when their pockets tell them otherwise is impolitic, impolite and stupid.
“Pretty good” is a relative term. And it’s usually in relation to where you are on the economic ladder. Glad you’re at a point where you’re happy with it.
Inflation is cumulative. Todays 3.7% stands on the shoulders of last year’s 9.1 which stands on the shoulder’s on the 3% the year before that. Since Biden was inaugurated, consumer prices are up 16.6%
Below is CPI. I’ve re-centered it so Jan 2021 is 100. Today it stands at 116.6
So while the rate of increase has slowed, we are still living with the legacy of last years 9%. That’s still embedded in the prices paid today.
News from 20 minutes ago. :-)
That’s too much math for the BLS.
Yeah, but other things did go back down. Eggs, for example, have returned (more or less) to earth from their trip to the stratosphere a few months back. So overall 16.6 is the number. The professional staff at BLS who produce these numbers really do try to get it right. I believed the numbers when they were very favorable under Trump. I believe them now.
“Good news everyone: things are getting worse, but slower than they were! Elect me, and together we can Slide Downhill At A More Manageable Rate™.
He’s not private jet rich, but I bet he hangs around with such folks.
If many household items are still 50% or more above pre-FJB, then for 16.6% to be correct, a lot of other things must have gone significantly DOWN in price, and not just compared to last year, but compared to 2 or 3 years ago. Can you name any?
Disney stock.
If only it were sold in grocery stores, it might be less expensive than toilet paper.
About a decade ago I was selected by BLS to participate in a year-long household expenditures survey. At the start of the survey they came to my house and we went through a very detailed category list of what we spent on several dozen classes of goods. After that it was was quarterly phone conversations that took about an hour each time (IIRC). They didn’t have us keep a detail diary of spending – it was just a retrospective “How much do you think you spent on X over the past three months?”.
I’m fairly OCD, and keep pretty detailed spending records in Quicken (which I’ve been using since 1992). I had quicken open during these surveys and was running quick reports to give very detailed answer. One of the phone surveyors even commented on how I was able to give such quick and detailed answers compared to most of the people she talked to. But even I was guessing at a lot of things (How much do we spend in a month on Alcohol? No real good idea – we do most of our liquor buying at the grocery store and I don’t break that out of the general “groceries” category). I can only imagine what kind of answers they got from people who don’t pay as much attention as I do.
My personal favorite was when they asked me how much they thought I could rent my house for. I have *NO* idea. I haven’t been in the rental market since I bought my first house in 1992, have never rented more than a one bedroom apartment, and that was in a different city 100 miles away.
I’ve been pretty skeptical of government consumer spending statistics ever since.
Yeah, that “how much would your home rent for?” seems like it might be the most deliberate “cooking” of the results, since other research shows that very few people have any idea what a reasonable figure would be. Even if it didn’t start out that way, they can certainly use it now to “prove” that prices haven’t gone up THAT much.
We’ve been in this 3000 square foot house for almost 20 years. The monthly mortgage payment, before [substantial] property taxes, is less than what some of my facebook friends are paying for rent on 1 or 2 bedroom apartments in not-exactly-luxurious apartment complexes in the area.
The two graphs in the OP don’t match up. If inflation is the rate of rise in prices in general, and inflation has not been negative or zero, then in general we should still see rising prices, with no levelling off and no reductions. I’m prepared to give a little here and there for time-scale, edge effects, methods, but in general — those two graphs can not both be true.
And eggs were a special case. Of course eggs have come back down. The soaring egg pricess were well ahead of inflation, and due to problems with chickens. That was a product-specific problem unconnected to (but layered on top of) inflation.
That’s downright Republican.
It helps to remember that a % of their “success” is a result of academic union contracts which protect their “success” from the effects of inflation. One might dicker over it being earned, but they can still bank their automatic increases. Others less successful cannot. If you raised your firm’s fee structure in the last 18 months are you likely to reduce it because the rate of change has slowed? Based on the administration’ policies – particularly on energy and spending – it’s not hard to predict that inflation will continue to increase.
The economic news is good for some – the same “haves” who were protected during lockdown in ‘20 and ‘21 – those who could work from home and were insulated by government, health care or education jobs from having to deal with their shop or restaurant or other job eliminated because the business closed or having to pay college loans. Or if they had to choose between job and health and vaccine requirements. “Have nots” then are suffering now.
Because prices are up 16.6%, and wages haven’t kept up, since the inauguration real median wages are DOWN over 3% and real wealth DOWN over 2%.
That’s pretty good?
The inflation the promised would be transitory turned out to be embedded in the current prices. When people heard transitory they thought that overall prices would, like the price of eggs, go up but come back down. Wrong-aroo. Overall prices shot up and stayed up and continued up from there.
Everything isn’t a conspiracy. The methodology may not be to your liking, but the professional staff does not “cook” the findings.
My personal indicators are utilities, local property taxes and water bills, and all our insurances. All of those are up for our household, although at the moment I don’t know how much.
Besides which, even Yellen has commented that the inflation was not so transitory. Darnedest thing. “Transitory” was them trying to debunk the fact that printing money causes inflation, and they tried to make it sound as if mere reprogramming of money from this to that was causing these peculiar but negligible inflation-looking effects. it was a lie, and they of course laughed it off when busted. Transitory did not even refer to the fact that inflation comes and goes while prices stay stuck high — they were minimzing the headline inflation without reference to prices.
I paid off my Phoenix place in 9 years, it wasn’t great but it was MINE. (1,000 sq ft townhome/condo. 3BR/1BA. $60k in 2009.) My current place is 4,500 sq ft, thanks to a big pay-down from the proceeds of selling the Phoenix place (also $60k plus all closing costs and they moved all my stuff which took THREE of the biggest U-Haul trucks) and I had a seller-carry note here for 6 years of about $415/month. 3 years to go. And property taxes are less than $1k/year.
I still sometimes get email offers to buy the Phoenix place, as-is/sight-unseen, most recent was $152k. But it wouldn’t have been worth staying there another 3 years even if I’d known ahead of time, and I wouldn’t have been able to get THIS place if I’d waited. Selling the Phoenix place was actually “triggered” by seeing this one available. I got things going quick, had it all done in about 2 weeks.
My last mortgage payments in Phoenix – including insurance and taxes – were about $600/month. Even then I knew people were paying $1000-1200/month on rent for the same size of place in those condos, and in lesser condition. I can’t imagine what the rent is now for those places.
They don’t have to come down in price, just increased less than 16%
If I find some you promise to pay me $100 every time from now on that you say the COI numbers are cooked or lies or whatever euphemism you’d use.
Ok?
Yes, and while eggs are no longer $5 or more/dozen (at least in some places), when’s the last time you saw them on sale for 99 cents? I used to see that sometimes in Phoenix just 3 years ago.
Or at least GOPe.