Economists Confused

…because they’re fucking idiots.  From Sundance:

The professional financial punditry can’t explain it. Flummoxed academics run around bumping into walls amid economic numbers that continue to defy expectations. All caused by a simple return to common sense ‘America First’ MAGAnomics.
Low unemployment (3.8%); wages growing (+3.2%); inflation stable (1.6%). These measures all have a cumulative impact on paycheck-to-paycheck Americans. Prices for durable goods are stable and wage growth is exceeding inflation. That means more disposable income in the middle-class…DUH. Which, when combined with the increased pay from lower middle-class tax rates, is exactly the intended outcome of MAGAnomics.

One more time:  come the reign of Emperor Kim, economists will all be forced to wear wizards’ hats in public.  To put it even more simply (for those of the economist persuasion):

The U.S. is where the growth is. We are in the period where exporting U.S. wealth (globalist policies) has been slowed/halted. We are confronting protectionist tariffs abroad which impede our exports, and simultaneously applying reciprocal tariffs toward those who want access to our U.S. market. As a consequence, capital investment is returning to Main Street USA (nationalist policy).
This is the heart of MAGAnomic policy.

12 comments

  1. The thing I’ve heard from some economists (a couple of whom have pretty good track records for mundane stuff) was that the US growth rate for the last year or so was outrunning the financial and supply parts of the economy – industrial production was climbing too fast for the raw materials and “bits and pieces” companies to keep up, and there were doubts about bank liquidity.

    The thing we’re finding out now is that the bottom-end supply sector had more production capacity than everyone thought, and expanded more aggressively than is common in most economic recoveries.

    The thing to watch for now is the labor issue – we’re about out of new bodies to throw at the empty jobs, and there’s no fast way to get several million smart, hardworking employees with technical skills.

    Improvements in productivity are the next possible way to keep the economy expanding at a good rate, but there’s no real plan for that at most companies…

  2. I question the contention that we don’t have enough bodies for the labor market. The BLS numbers show sizable numbers of people out of the job market or underemployed. Will some of those come back to the job market? Will they have the right skill set? IDK, wish we had better info on this.

    Inflation is stable but there is price pressure in food. It will be interesting to see this over the next growing season as we get more data on the affects of the flooding in SD, IA, NE and MO.

    1. Depending on the industry, there aren’t enough bodies — not because there aren’t enough people to do the job, but because the people who can do the job have chosen to work in other industries instead, whether because of inclination or for financial reasons.
      Hence, e.g.: there’s a shortage of truck drivers because the oil industry is sucking lots of otherwise-drivers into the fracking fields, and so on.

  3. Economists……
    Harry Truman had a standing order to his people people:
    Find me a one armed economist, someone incapable of saying
    “On the other hand…..”!

  4. In science, theories often develop into laws over some years, so why doesn’t the same thing happen in economics?
    For decades I’ve heard too many economists spouting economic theory, with that phony crackpot Krugman leading the pack, but the only law I’ve ever heard from that field was supply and demand.
    I wonder if they ever get out of their offices and look around at the real world?

  5. RE: part of cirby’s comment: “….Improvements in productivity are the next possible way to keep the economy expanding at a good rate, but there’s no real plan for that at most companies…”

    It’s coming and it’s called “automation” and task redesign. Jobs that have seen no, or very little, automation are about to receive a whole lot of it. 16 years ago I built a document management system that allowed replacing 14 8-hour employees with 4 2-hour employees – 1 FTE – and with another $40K in the software budget I could have gotten those 4 down to 1 employee – .25 FTE (the 14X all-day keystrokers got moved to other jobs – the client’s management in this case actually listened when I said “let the computers do the stupid repetitive stuff and move the humans to where creative intelligence will add value and increase return”) and the 4 replacements were “in the bucket” for 2 hours at a time to deal with exceptions the software couldn’t handle. That particular function went from a 3-5 day backlog to only 30 minutes behind almost overnight, and when management finally allowed part-timers to work from home, there were days when the backlog was <5 minutes. (The bottom line was each 8-hour in-house employee had a full burden rate of ~$62K/yr, 13X = ~800K, the system hardware and software = $525K, so the ROI was 8 months. Get used to seeing that sort of thing.)

    Trust me, in the last 16 years imaging and OCR software have gotten orders of magnitude better, as has internet connection speed. Today I could get a 3 month ROI on that same system, but with digital forms and intelligent data capture instead of processing paper, probably closer to 3 weeks.

    McDonald's is installing kiosks about as fast as they can, and I'd bet also looking real hard at automating the cooking processes; Amazon is leaving no stone unturned looking for biz efficiency, with Walmart doing its best trying to keep up. Amazon is also moving into its own OTR trucking and not far from eating UPS' lunch on last mile delivery. Whatever they develop, once Amazon perfects it for itself, its AWS Division will start offering it to other businesses they're not competing against. Yet. The Air Force is using AI as a primary driver in Predictive Maintenance; at (company name redacted) we were doing that 30+ years ago with calculators and software that was positively stone age in comparison.

    Look for huge educational changes – "schools" will become a thing of the past as tailored task-specific online education really takes off in the next 5-10 years (that will also leave behind anyone who cannot adapt and/or keep up, so look for social disruption and NEW!! IMPROVED!! gummint programs to deal with it; example: autonomous vehicles used as street sweepers will eliminate even menial broom jobs).

    So, yeah, Productivity is coming, and in quantities you can't imagine.

    1. Funny, Amazon can’t find me in rural NV, yet UPS & FedEx come by every day. Which is why I don’t buy from Amazon.

    2. Having used the McKiosks for about a year or so now, I’m not really impressed, for two reasons: one, the hardware snob in me is unimpressed with what they’ve chosen, as the machines are slow and laggy. Two, and actually more important, they are missing a few customizations. Want an Egg McMuffin with folded egg, or a McGriddle with the regular egg? Too bad, you still have to go to the cashier. Plus, one of them broke my debit card (one of the chip pins got lifted off the plastic and folded over, which made the chip unreadable) although that’s probably due to customer abuse.

    3. Here’s the problem with that scenario: What are you going to do with the bottom half of the bell curve that USED to do those jobs?

      Because they will have two things in common:

      They won’t be able to compete for the shrinking pool of higher skill jobs.

      They will be able to vote in our warm body democracy.

      This has already produced proposals and actual laws for such things as “robot taxes” to finance welfare, and there will be more.

  6. I now see Amazon trucks all over the neighborhood. Were they and/or other companies allowed to compete with the USPS for the delivery of first class mail I’d bet they could eat their lunch also. This bit of privatization would make the USPS howl but so be it.

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