Go Joe Go

Biden's doing great - which is kinda hard for me to say because I've never been a Joe Biden fan.

Come See About Me

As we "age out", there could be problems that won't lend themselves easily to solutions.

Not that there are any problems in a large diverse society that are easy to tackle, but when you're in a struggle against a strong authoritarian trend, it's likely there will be plenty of muddled thinking - even more than "usual".

On the immigration issue, we have a bunch of "conservatives" who are spouting off about workforce needs and not wanting immigrants "stealing our jobs!!!" And they know we'd be hard up without immigrants to step in and do the jobs we need doing, but they don't like all those brown people, so their idea is to crack down on all this feminism stuff and put women back in the home, making babies and raising workers.

In a May 2022 House Judiciary Committee hearing, MAGA Mike Johnson suggested that abortion deprives the national economy of potential “able-bodied workers” during a discussion of the Supreme Court’s anticipated overturning of Roe v. Wade.

But there's a bigger problem coming down the road if we give in to these idiots and close off immigration completely - which is actually what some of them want to do.

Circling back now - as we age, we're bound to see a labor squeeze that's going to get tighter, because more people are retiring, and fewer people are able to step in and take over.

So who's going to be changing your sheets, and cooking your meals, and wrangling your meds, and doing all the things you need done, but can't manage on your own cuz you're too fuckin' old? Up until recently, we've had plenty of immigrants looking to ply their trades, or learn one, or otherwise handle a job that requires particular skills.

Who's going to be here to look after you when you can't handle it anymore?

This piece from Brookings Institution looks more globally, and they don't address the problems posed by the migrating herds that are already on the move and making for trouble.

The age of the longevity economy

Because demographic shifts are incremental, gradual, and long-term, most people do not look carefully at new data until the change is so significant that they are forced to pay attention. Last year marked three demographic milestones: The global population topped 8 billion; India overtook China as the most populous country in the world; and China saw its first population decrease in decades. Yet, the milestone with perhaps the most significant social and economic implications passed with relatively little fanfare: The number of older adults—those aged 50 and over—surpassed the number of children under the age of 15 for the first time (Figure 1). Broadly speaking, the 8 billion global population is now comprised of 2 billion children, 2 billion older adults, and 4 billion youth and other adults.

Despite significant changes in demographic trends, the global population continues to rise, with an estimated increase of 75 million people in the next year alone. An important trend implied by the data in Figure 1 is that population growth today is driven by the falling mortality of adults and not by high fertility. In fact, the number of children in the world has peaked and will remain constant at its current level for a couple of decades. What is instead driving population growth is that people are living longer, extending their lives well beyond age 50. So, if we look at the change in age distribution between now and 2040—when the world will have added 1 billion more people—we will see no change in the number of children, but an additional 800 million people in the 50+ age group (Figure 2).

Where will the growth in the 50+ population come from?

The 800-million-person expansion in the 50+ age group is heavily concentrated in developing countries in Asia. The increase is particularly noticeable in the consumer class, defined as those spending more than $12 per day in 2017 purchasing power parity (PPP). Membership in this consumer class indicates an ability to afford not just basic necessities, but additional goods and services as well. While the overall population is projected to rise by 1 billion by 2040, the consumer class is expected to expand by 2 billion. Figure 3 shows that 700 million of these people will live in 10 low- and middle-income countries, mostly in Asia. The United States is the only high-income country with a significant rise in older adults. If the countries of the European Union were combined, their increase in the number of older adults would be roughly equivalent to that of the U.S.

The country-level breakdown reveals that even though India is the world’s most populous country with a still-growing population, China will have a significantly larger increase in its 50+ consumer class population.

Furthermore, China’s shifting demographics are happening at a comparatively early stage in its economic development. By 2040, China’s older adult population will resemble Japan’s today — its median age will reach 48, compared to 50 in Japan this year. But the average expenditure of a Chinese consumer in 2040 will be only two-thirds as much as a Japanese consumer spends today—hence the observation that China is one of many countries growing old before it grows rich.

Chronicling the power of the Longevity Economy

The Longevity Economy refers to the economic contributions of people aged 50 years and older. According to AARP’s Global Longevity Economy Outlook report, In 2020 the 50-plus population contributed $45 trillion to global GDP, or 34% of the total. That equates to about three times the combined revenue of the world’s 100 highest-earning companies in 2020. World Data Lab projects that the spending growth of this group will be around 5.5% over the next decade. In 2024, older adults account for 42% of total spending worldwide, and as they grow in numbers and in wealth, their relative contribution will continue to steadily rise.

Within this group of older adults, those aged 65 and over will be the biggest spenders. In the large developing countries where the growth is concentrated, the new cohort of seniors will have accumulated higher savings than their predecessors, so per-capita spending will also increase. The combination of these two forces will result in aggregate growth of older adult spending of 6 to 6.5% per year for the next decade, making the 65+ age group the fastest-growing age cohort.

In aging societies, like China, the power of the Longevity Economy is particularly striking. Over the next decade, Chinese seniors are expected to experience twice the spending growth compared to other consumers, driven equally by an increase in the number of older adults and higher spending per citizen in this population segment.

Understanding trendlines before they become headlines

While demographic shifts tend to take place over decades, the past year has borne witness to major milestones that have garnered significant attention with enormous downstream societal and economic implications. Essentially, trendlines have now become headlines. Advancing our understanding of these demographic realities and their consequences in the decades to come will be increasingly important as the world is getting older at a faster pace than ever before.

Today's Zeihan

Peter Zeihan observes the world, and while he's not glum, he's also not crazy about our longterm prospects.

Remember:

Geopolitics is a poker game with 200 players who're all cheating. They all know they're all cheating, and the fact that they all know they're all cheating helps them rationalize their cheating.

Today's Press Poodles

WaPo reports a pretty good jobs number for November with "labor market slowdown" (even though the number for Nov was higher than Oct), and that bit was in big bold headline type, but then - in tiny little sub-head font - it's "favorable to workers".

And they bury the rest of the good news in the last 2 paragraphs.

• 4% Wage Growth
• Unemployment down to 3.7%
• Inflation is less than Wage Growth
• Bankers feel encouraged

Fuckin' Press Poodles

U.S. adds 199,000 jobs in November as labor market slowdown continues

The unemployment rate dipped to 3.7 percent, reflecting a labor market that remains favorable to workers

The U.S. economy created 199,000 jobs in November and the unemployment rate fell to 3.7 percent, according to data released Friday by the Bureau of Labor Statistics, reflecting the continued slowdown in labor market.

The labor market has tightened through the end of the year with just a handful of industries, health care especially, fueling job growth, keeping the economy out of a recession that economists had widely feared just a year ago.

“The current state of the labor market is a good one,” said Nick Bunker, economic research director at the jobs site Indeed. “For the last year plus, we’ve been talking about a normalizing labor market. We’re at the spot where that process is complete. This is a normal labor market. Things have calmed down in a painless way.”

Health care and government created the most jobs, as consumers have continued to shift spending toward services and an aging population has intensified that demand. Health care added 77,000 jobs in November, mainly in ambulatory health-care services, hospitals and nursing-care facilities. The government sector added 49,000 jobs in November, finally catching its pre-pandemic employment levels, as wages in state and local government have caught up with the private sector.

Manufacturing also trended up by 28,000, reflecting the return of union auto-manufacturing workers from their strike. Leisure and hospitality added nearly 40,000 jobs, mostly at restaurants and bars, after months of choppy growth.

Other industries showed negative or sluggish growth. Retail lost 38,000 jobs, while transportation and warehousing, construction, financial services and the information sector, which includes tech, showed little change.

Some of the slowdown is a reaction to the Federal Reserve’s interest rate hikes. The central bank, which has lifted interest rates to the highest level in 22 years to bring down inflation, so far has achieved its goal of easing demand in the labor market and wage growth enough to bring down inflation, to 3.2 percent over the year in October, without triggering catastrophic job losses so far. Economists caution that it remains too early to see the full impact of the rate hikes.

Investors are optimistic that the softening in the labor market will spur the Fed to cut rates early next year, which has spurred enthusiasm in the financial markets. Friday’s jobs report provides one of the last snapshots of the labor market before the Fed meets Tuesday and Wednesday to consider policy on interest rates, which are designed to curb inflation.

By most measures, the labor market remains just as strong or stronger than the years leading up to the pandemic, a period marked by low unemployment and hardy job growth. The percentage of Americans who are unemployed has been below 4 percent for two years, a sign that the labor market remains unusually favorable for workers, giving them leverage to demand raises and switch into better jobs. Layoffs also remained low in October, according to the Labor Department’s job openings survey released Tuesday, despite some concentrated pockets of job losses in finance, tech and media.

Meanwhile, job openings have dropped substantially from their peak at 12 million in March 2022 down to 8.7 million jobs in October, according to the Tuesday report, in a sign that employers are no longer on a hiring frenzy. The low layoff rates and reduction in hours worked since earlier this year are signs that employers are acting cautiously, holding on to workers despite tempered demand, after years of competing for labor.

“Employers aren’t willing to close their eyes and pay for labor anymore,” said Drew Matus, chief market strategist at MetLife Investment Management. “But they’re paying attention to who and what they need. And they’re thinking, what if everything gets so much better and I’m understaffed? Some of that is a hangover from the covid experience.”

In welcome news for the Fed, wage growth moderated in November, rising by 4 percent over the previous 12 months in November, to $34.10 an hour. The good news for workers is that even as wage growth has moderated since earlier this year, inflation has slowed more, meaning average hourly earnings are beating price increases, boosting Americans’ spending power.

“This is encouraging for central bankers and the people getting real wage gains,” Bunker said. “It’s helping people spend more which is good for GDP growth and for everyone. It’s a win-win for a variety of audiences.”

Today's Econ 101

1. Consolidation
2. Charging more for less
3. Exploiting workers
4. The illusion of scarcity
5. Mis-directed rage

The Rebound

There are problems with the American economy. 

• Housing affordability
• Wage suppression
• Labor rights being denied
• Massive Inequity

Way too many people are struggling just to squeak by.

IMHO, we can fix an awful lot of those difficulties by fixing the tax code. We've seen the long term results of the Trickle Down thing, and we have to face the simple fact that it was bullshit from the start. Poppy Bush nailed it perfectly in 1980 when he called it Voodoo Economics.

For every dollar in direct stimulus (the kind Biden and the Dems pushed thru in 2021), we see, on average, a boost in economic activity of $1.19. For every dollar in tax cuts (like the GOP's TaxScam2017®) we see 59¢ in return. Tell me you wouldn't fire your broker if he kept pushing you in the wrong fucking direction on this shit.

My point is that Biden and the Democrats are working the problems, and making some changes that are showing some pretty great results.

I realize I sound like a cheerleader, but when it works, it works - and we should all be able to acknowledge that.

So lemme see - Biden's doing as well as anybody could do handling numerous foreign affairs clusterfucks (including 2 hot wars and other periodic flare-ups), he's got the economy starting to click, he's got us poised on the verge of enormous Climate Change progress, and he's not a fucking Nazi.

So if you're dumb enough to be looking for a reason to vote Biden-Harris that doesn't stop at "HE BEAT THAT DOG-ASS NAZI TRUMP", then you've got plenty to go on.

Household Wealth Has Taken Off, Fed Data Show. That Explains a Lot.

Americans’ wealth grew by 37% from 2019 to 2022, an astonishing pace of accumulation that helps explain why the U.S. economy has remained robust, according to the latest report on consumer finances released Wednesday by the Federal Reserve.

U.S. households’ real median net worth grew to $192,900 by the end of 2022, up from $141,100 recorded three years prior, according to the latest Survey of Consumer Finances. The rapid pace of wealth growth was the largest three-year increase recorded in what the Fed described as the modern survey results. It was more than double the next-fastest increase on record, according to the banks.

That's a 37% increase since the pandemic.

The Fed’s Survey of Consumer Finances is ordinarily conducted every three years and is one of the primary sources of information on the financial condition of different types of U.S. families, but was delayed because of the Covid-19 pandemic. The data released Wednesday are from surveys conducted between March and December 2022.

The figures shed fresh light on just how much financial strength American households were able to build up throughout the course of the pandemic, as generous federal stimulus payments and a slowdown in spending in 2020 allowed families to accumulate savings and pay down debt. Easy-money policies allowed households to refinance mortgages at ultralow rates, while student-loan forbearance programs put payments on hold for tens of millions of borrowers.

As a result, all measures of what the survey terms “financial fragility” declined between 2019 and 2022. The median leverage ratio, or a family’s total debt relative to its total assets, declined to its lowest level in two decades, at 29.2%. The median ratio of debt payments to income ratio also dropped to its lowest level on record, at 13.4%.

That combination of soaring net worth and rising affordability of debt payments helps to explain why the economy has been able to defy expectations and remain so resilient in the face of high inflation and rapidly rising interest rates. With more cash on hand, households have been able to keep up a surprisingly strong level of spending, which has propped up the labor market and helped stave off a long-anticipated recession.

Americans’ surge in net worth was helped along by rising homeownership rates, the increase in home values, higher stock prices, greater overall participation in investing, and, to some extent, higher incomes. Americans who owned their homes or participated in the stock market were more likely to have built up wealth between 2019 and 2022, Federal Reserve economists said.

By 2021, U.S. household median income hit $70,300, a 3% increase from the prior survey. But the mean household income increased 15% from $123,400 recorded in 2018 to $141,900 in 2021.

The income gains were “relatively widespread,” though there were variances among demographic groups, according to the Fed. Median income rose by 1% for white households over the three-year span, for example, but declined by 2% for Black families and fell by 1% for Hispanic.

Other big wealth generators, homeownership and stock-market participation, also increased slightly between 2019 and 2022. The homeownership rate rose to 66.1% of the population, according to the Fed. The median net housing value rose from $139,100 in 2019 to $201,000 in 2022, a positive for homeowners. This was due, in large part, to the fact that home prices rose and debt was relatively flat.

But for those looking to buy, things were getting tougher. Housing affordability fell to historic lows, with the median home worth more than 4.6 times the median family income.

Investing activity also picked up. About two-thirds of working-age families reported they invested in a retirement plan during the 2022 survey period. Roughly one in five households invested in stocks, up from the 15.2% recorded in the 2019 survey. That had a measurable impact given the “sizable rise in major stock indexes” over this period, according to the Fed. All major income groups experienced robust growth in the median and average values of their investments.

In addition to bulking up the asset side of the household balance sheet, Americans also reduced their debt obligations over the course of 2019 to 2022. The median leverage ratio—a household’s total debt relative to total assets—declined to 29.2%, the lowest recorded rate in 20 years, according to the Fed. Only about 6.5% of U.S. families with debt had payment-to-income ratios above 40% as of 2022, the lowest rate on record.

Although the Fed’s survey data only extends through the end of 2022, the relative strength of U.S. consumers has extended into 2023 as well, despite the spending down of pandemic-era savings, higher interest rates, and inflation rates persistently above the Fed’s 2% target.

The deleveraging Americans did during the pandemic has continued to keep consumer spending levels up, according to new, separate research released Wednesday by the Federal Reserve Bank of New York. The large swath of households that took advantage of low interest rates and extra savings to pay down debt, paired with forbearance programs like the pause on student-loan payments, led to significant, sustained improvements in household cash flows.

About 14 million households refinanced their mortgages, which reduced housing debt by about $30 billion annually through 2021, the New York Fed researchers found. Starting in 2020, the researchers calculated, the additional cash flow available for consumption amounted to about $450 billion.

That extra cash has helped drive the unexpectedly steady levels of high consumer spending. While spending growth has retreated somewhat from its 2022 levels, the six-month average of 5.4% is well above its prepandemic level of 3.1% in February 2020. That, in turn, has helped keep readings of gross domestic product on the upswing, given that consumer spending is a huge engine of economic activity.

But with higher interest rates bearing down on consumers and continued restrictions on purchasing power, economists question how long U.S. households can sustain the spending.

It's time for somebody to step up and save Capitalism from the Capitalists - again.

That someone has always been a Progressive, and those Progressives are all on the Democrats' side of the aisle now.

The Bidening Continues

And of course the Press Poodle (Catherine Rampell) has to throw a little shade and remind us that presidents don't really, directly, all-that-much, maybe-it's something-else, get the credit for good economic news - even when it's astonishingly good news, and makes the doom-n-gloom gang look like total dopes. She just can't bring herself to say straight out that after decades of fucked up Republican policy decisions, Biden and the Dems are proving government can work, and have positive effects on the lives of regular everyday Americans.

At least she didn't leave the usual shitty aftertaste of "Yeah but it's prob'ly not good news for the Democrats in the long run".

Fuck 'em - take the W, Mikey.

Opinion

3 milestones from a stunning jobs report

The U.S. economy added nearly twice as many jobs in September as economists had forecast, according to the Bureau of Labor Statistics. And that’s before you consider how much job growth was revised upward in July and August. All in all, it was an astonishingly good report.

Three milestones in particular are worth celebrating:

1. Raise a glass

When covid hit, the shuttering of businesses around the country and reluctance of consumers to dine out eliminated about half the jobs across the industry. That is, between February and April 2020, about 6 million restaurant and bar jobs vanished.

Even as the economy reopened, these employers struggled to hire back workers. Some longtime food services workers had decided to leave the business altogether, trading up to better-paying or more humane positions. Some jumped from employer to employer amid the bidding war for staff. Declines in immigration — owing to pandemic-era policies and the Trump administration’s broader sabotage of immigration processing — hurt the industry as well, since foreign-born workers make up about a fifth of the sector’s jobs.

But bars and restaurants have steadily been recovering, and as of last month, employment levels were finally back to where then were in February 2020. It probably helps that more people are joining the labor force and immigration has largely normalized.

2. A boon for public-sector workers

Public-sector employment also took a hit early in the pandemic. The sector overall has finally recovered all the jobs lost, though that milestone is entirely driven by growth in the federal government.

State and local governments are still deeply in the hole. Hence all those headlines about shortages of teachers, bus drivers, cops, corrections officers, etc.

To be clear, state and local governments have lots of vacancies but are struggling to fill them. This is the result of a collection of factors. The sector’s disproportionately older workforce is aging into retirement, for instance. Amid high inflation, wages in the private sector have risen much faster than those in the public sector (which already paid less for many equivalent roles). Some government jobs (public health, education, elections, policing) have also grown much more stressful in recent years.

3. They can do it

Despite all those warnings about a “she-cession” setting working women back a generation, working women seem to be doing better than ever. After some stagnation in women’s employment early in the 21st century, women ages 25 to 54 are more likely to be working today than at any previous time in history. This is thanks partly to demographic changes, partly to changing social norms and partly to changing working conditions.

The same milestone is not true of men. Prime-age men’s labor force participation is back to where it was pre-pandemic, but longer-term, it’s been trending downward.

So: Does President Biden deserve credit for these remarkable numbers?

In his remarks Friday afternoon, he certainly claimed as much, saying, “It’s Bidenomics, growing the economy from the middle-out, bottom-up, not the top down.” In truth, presidents have very limited control over economic conditions, but since he gets blamed for the bad things no matter what, it’s hard to chastise him for taking credit for the good ones.

To the extent “Bidenomics” is primarily about manufacturing and industrial policy, though, its fingerprints are not terribly visible in data so far.

When Biden spoke in celebration of the robust hiring numbers, manufacturing was the one and only sector he called out by name. The same was true last month. But the recent hiring numbers show very little growth in the sector, even before taking into account the work stoppages related to the United Auto Workers’ strike. (If the strike had begun earlier in the month, the report might well have shown job losses rather than gains in the sector.) And over a longer-term horizon, manufacturing job growth since the pandemic began has been weaker than that in the rest of the economy. Other metrics suggest the sector has been contracting for the past 11 consecutive months.

But on the other hand: Claims that Biden is somehow discouraging Americans writ large from working, or otherwise hamstringing employers, are nowhere evident in the data. Employers are hiring, and Americans are ready to work.

China

1980s: The Canadians are buying up all the businesses - we're doomed!

We weren't doomed

1990s: The Japanese are buying up all the commercial real estate - we're doomed!

We weren't doomed

2000s: The Arabs are buying up all the resorts and apartments and condos - we're doomed!

We weren't doomed

2010s: Foreigners are buying up all the US debt bonds - we're doomed!

We weren't doomed

2020: The Chinese are buying up all the farm land - we're doomed!

Jeezus H Fuq, what's wrong with these people?

I'm not saying, "Don't worry, be happy". There's plenty to worry about. But I will say there's always an under-taste of fuckery whenever I hear some "conservative" telling us horrible things are about to happen.

China’s economic woes may leave U.S. and others all but unscathed

The forecast for escaping economic damage could deteriorate if Beijing cheapens the currency to boost exports

Judith Marks, the chief executive of the elevator maker Otis Worldwide, returned in April from a 10-day trip to China saying “all signals look positive” for the country’s recovery from its draconian covid lockdown.

The Chinese rebound that seemed to be gaining momentum in April lost steam in May and reached midsummer in danger of petering out altogether. Suddenly, the world’s second-largest economy, for years a reliable juggernaut, was ailing. The core of the problem: a debt-ridden, overbuilt property sector that threatened to smother growth well short of the government’s 5 percent annual target.

Chinese weakness is bad news for companies such as Otis, based in Farmington, Conn. China is its most profitable market for new equipment sales, accounting last year for roughly one-third of orders. Through the first half of the year, China was the company’s only major market where orders were in decline.

But the elevators that Otis sells in China are made there. So while the property market slump means that fewer are needed, most of the pain will be felt at Otis facilities in China, not in the United States. For all its remarkable progress and prosperity, China is not an important enough customer of goods produced elsewhere for its woes to be contagious. At least for now.

“China has been less of a growth engine than is widely assumed,” said Brad Setser, a former Biden administration trade adviser. “The direct effects of its slowdown are going to be relatively modest. It doesn’t matter to the export side of the U.S. economy if China grows at zero or China grows at 5 percent.”

That could change if China’s slowdown proves worse than anticipated, unnerving global financial markets, or if the government artificially cheapens its currency in a bid to export its way out of the crisis at the expense of its trading partners.

But China’s downshifting economy is likely to clip just a few tenths of a percentage point off global growth, economists have said. One indication of the country’s modest impact can be seen in its trade in manufactured goods, such as industrial equipment, automobiles, furniture and appliances.

China’s imports of manufactured items for its own use, rather than to make products for customers in other countries, amount to just 3.5 percent of gross domestic product, according to Setser. And China’s reliance on foreign factories is about one-third lower than when Xi Jinping became the country’s leader in 2012 and accelerated a self-sufficiency drive.

“That’s unusually low,” said Setser, now a senior fellow with the Council on Foreign Relations. “China makes almost all of the manufactured goods consumed in China.”

Otis, which has plants in Tianjin and near Shanghai, has operated in China since the mid-1990s. Its elevators and escalators are used in infrastructure projects, such as the Tianjin metro, as well as in the residential and commercial developments at the heart of China’s real estate bubble.

Although the property market slowdown is pinching new equipment orders, demand for servicing of installed units remains strong, Marks told investors in July, when Otis reported higher quarterly sales and earnings.

To be sure, a prolonged downturn in China — or one that is deeper than expected — would be felt around the world. First to suffer would be major commodity producers. The Chinese economic miracle for decades has vacuumed up copper from Peru, ore from Australia, soybeans from Brazil and oil from Saudi Arabia and Russia.

Direct financial links between the United States and China have thinned in recent years, amid a trade war and rising geopolitical tensions. But a deeper Chinese slump could set off a “negative feedback loop,” with sinking stock and bond prices, rising volatility and a soaring dollar combining to sap consumer and business confidence in the United States and elsewhere.

Such a scenario, akin to the fallout from the 2015 Chinese stock market crash, could shave half a percentage point off global growth and 0.3 points off U.S. growth, according to Gregory Daco, the chief economist at EY-Parthenon.

“What matters to the U.S. and the rest of the world is if the China shock is translated into a broad-based deterioration in overall financial conditions,” he said.

China’s neighbors are already feeling a chill. But their decline in exports to China is primarily the result of American consumers buying fewer electronics than they did during the work-from-home phase of the pandemic rather than a consequence of Chinese domestic weakness.

China sits at the center of a pan-Asian electronics supply chain, assembling products with components shipped there from South Korea, Malaysia, Thailand and Taiwan.

Multinational corporations that serve the domestic Chinese market also would be hurt. The German automaker BMW depends on China for more than 29 percent of its annual revenue. More than 27 percent of Intel’s sales come from Chinese customers.

“China does matter for the global economy. Germany is a big exporter to it. It matters for commodity markets. It sets the tone for emerging Asia,” said Nathan Sheets, the global chief economist at Citigroup.

But China’s old growth model, which relied on heavy investment in public infrastructure and housing, is exhausted. After decades of frenzied growth, the country has just about all the high-speed rail lines and apartment complexes that it needs.

Chinese leaders have said they intend to pivot to an economy based on more consumer spending and service industries. But “there’s still a long way to go,” Sheets said.

The current slowdown underscores a shift in China’s global image. For years, China’s vast domestic market beckoned multinational corporations with the promise of enormous profits. And it seemed certain to surpass the United States as the world’s largest economy.

Now, the outlook is less rosy. China grew in the second quarter at an annual pace just above 3 percent, a far cry from the roughly 9 percent rate it averaged over its first three decades of economic reform. Its aging labor force is shrinking, and Xi emphasizes loyalty to the Communist Party rather than expanding the economy.

Visiting Beijing last week, Commerce Secretary Gina Raimondo said U.S. business executives have told her that China is “uninvestable” because of the government’s increasingly erratic treatment of foreign businesses.

“China is growing slower and building less. It’s not going to be uniquely central the way it used to be,” said Scott Kennedy, a senior adviser at the Center for Strategic and International Studies (CSIS).

The International Monetary Fund says China will contribute more than one-third of global growth this year. But that figure overstates China’s impact on its trading partners, some economists have said. Rather, it demonstrates the arithmetic truth that China, even with all its problems, is a large economy that will grow faster than its counterparts. That produces a large output gain, but most of the benefits stay at home.

China runs a sizable trade surplus with the rest of the world, meaning it sells to other countries much more than it buys from them. Chinese exporters dominate global markets for products such as electronics, footwear and aluminum, while consumers in China save much of their income rather than spending it on foreign goods.

As the Federal Reserve and other major central banks tried to cool inflation by raising interest rates over the past year, foreign demand for Chinese goods sagged. Through July, Chinese exports were down 5 percent from the same period in 2022. But imports fell nearly 8 percent, meaning the surplus widened.

“Countries that run a trade surplus basically subtract more from global growth than they contribute,” said George Magnus, an economist at Oxford University’s China Center. “It’s doing more for its own growth than it’s contributing.”

Exports have been a central ingredient in China’s economic strategy for decades. Government officials have repeatedly spoken of promoting domestic consumption. But in the past three years, China’s export sector has delivered more than one-fifth of the country’s annual economic growth, the largest share since the 1997 Asian financial crisis, according to the ChinaPower project at CSIS.

China began the year with hopes for a boom. In December, Xi reluctantly relaxed his strict zero-covid policy after rare public protests. Freed from lockdown, Chinese consumers were expected to drive an economic rebound.

But after a burst of spending, the recovery fizzled. Fresh government data this week showed Chinese factories, consumers and real estate developers all mired in a slump.

“They’re structurally in a deep hole that they’re going to have a lot of difficulty climbing out of,” said Andrew Collier, the managing director of Orient Capital Research in Hong Kong.

Chinese authorities have taken a number of steps to revive growth, including cutting interest rates. But they have made little headway. And with more than 21 percent of young people unemployed, the prospect of social unrest looms.

One lever Beijing has not pulled is manipulating the value of its currency.

The yuan this year has fallen 5 percent against the dollar, reflecting China’s slower growth and lower interest rates. The government could further cheapen the yuan by selling it on global markets. That would effectively discount Chinese goods, making them less expensive for customers paying with dollars and euros.

Swamping foreign markets with made-in-China products would raise export earnings and boost domestic employment. But it would be certain to worsen already fractious relations with the United States and Europe.

There’s no sign yet that the Chinese authorities plan to make such a move. But if the economic deterioration accelerates, they might.

After all, they have done so before. China kept its currency undervalued for years after joining the global trading system in 2001, prompting years of complaints from the U.S. government and American businesses.

Better Is Better

It's still not enough, but whatever Biden's team is doing seems to be working OK so far. 

We've got the right guy in the White House, he's workin' hard, and he's got it headed in the right direction. Let's try not to fuck it up.

Inflation eased further in May but remains above normal levels

The latest inflation snapshot comes as the Federal Reserve is expected to leave rates untouched at this week’s policy meeting

Inflation eased further in May, but it’s still unclear whether the economy can slow just enough without causing pain to families and businesses already squeezed by high costs for groceries or rent.

A report out Tuesday from the Bureau of Labor Statistics showed inflation eased for the 11th straight month in May. Prices rose 4 percent in comparison with last year, the smallest 12-month increase since March 2021, and an improvement from the 4.9 percent annual rate noted in April. Prices also rose 0.1 percent in May compared with the previous month.

Those figures show significant progress since the summer, when prices soared to 40-year highs and the consumer price index peaked at 9.1 percent on a year-over-year basis. But inflation is still above normal levels, and a looming question is whether large price increases will become a permanent feature of the economy — or whether more economic pain is necessary for policymakers to root out persistent inflation.

“The bigger question for inflation is: Where is it going? Where does it settle out?” said Peter Boockvar, the chief investment officer at the Bleakley Financial Group. “Are we just going to go back to this 1-to-2 percent inflation trend that we got so used to? Or is there something so structural that after the spike, after the comedown, are we going to settle at 3 [percent]?”

He added: “That plays into: How high do rates stay, and for how long?”

People are spending less on hotels, flights and restaurants

Major stock indexes flashed green Tuesday morning. Shortly after the open, the Dow Jones Industrial Average was up 109.7 points, or 0.32 percent. The S&P 500 index rose 0.49 percent, and the Nasdaq 0.69 percent.

Housing costs continue to be a major driver of overall inflation. Rent rose 0.5 percent in May over the month before, only a minor improvement from a 0.6 percent increase in April. Rental costs are still up 8.7 percent over last year.

Costs for used cars and trucks also increased 4.4 percent in May in comparison with April, as they did the month before. Wholesale costs for used cars have been rising, and those increases are showing up in retail prices.

A narrower measure of prices that strips out more-volatile categories including food and energy rose 0.4 percent in May, as it did in April and March. Normally, “core inflation” may rise by between 0.1 and 0.2 percent. Fed officials are especially focused on this particular measure since it helps them gauge the underlying sources of inflation that can become the most persistent.

Prices for a range of “core” goods rose yet again in May. Wendy Edelberg, director of the Hamilton Project and a former chief economist at the Congressional Budget Office, said the continued price increases show people are still spending — but that could force the Fed to slow the economy more, even if central bankers skip a rate hike this week.

“If we have any hope of getting inflation down, goods prices have to fall, just outright fall,” Edelberg said. “I expected that to happen many months ago. We had a couple of months of good news on that front, but then real consumer spending remained really strong to my surprise, and perhaps to retailers’ surprise.”

Encouraging signs were sprinkled throughout the report, too. The category for household furnishings fell 0.6 percent over the month, marking that index’s first decline since June 2021 and its largest one-month decline since August 2009. Airfares also decreased 3 percent over the month after a 2.6 percent decline in April.

To get inflation under control, the Federal Reserve has raised its benchmark interest rate at a breakneck pace since March 2022. Those moves have brought the central bank rate, the federal funds rate, to between 5 and 5.25 percent — the highest level in 16 years. The goal is for steep borrowing costs to curb demand for all kinds of lending and investments, including mortgages and auto loans, so that demand for new houses or cars can fall into better balance with supply.

In Charleston, S.C., managers at Neal Brothers aren’t expecting supply chains, prices or the overall economy to go back to the way they were. The export, packing and distribution services company instead is focused on adjusting to the “new normal” on anything from diesel to liquid propane to timber, said vice president Harry Griffin.

Griffin also worries that the Fed’s fight to rein prices in will hamper his business, too. Neal Brothers stores building materials and other goods that will eventually be used by contractors constructing new homes. If the home building industry seizes up entirely and people stop building, that could hit Griffin’s bottom line.

“As long as these interest rates stay really high, it could affect the home building industry long-term, and that may keep importers from importing as much lumber products in as they have been,” Griffin said. “It’s all connected.”

Much of the economy, though, has remained resilient throughout the Fed’s aggressive fight against inflation. Employers added 339,000 jobs in May, marking the 29th straight month of strong job growth. The country does not appear to be barreling toward a recession. And while there are signs that Americans are spending less on restaurants, hotels and airlines, that could help the Fed’s attempts to curb prices in service industries, which have been especially susceptible to labor shortages.

President Biden touted the report, pointing to steps his administration has taken to tackle the cost of gas, prescription drugs and health insurance premiums.

“At the same time, the unemployment rate has remained below 4 percent for the longest stretch in more than 50 years, helping to support wage gains over the last year, even after accounting for inflation,” Biden said in a statement. “More Americans are in the workforce than in decades.”

For much of the past 15 months, the Fed has rushed to catch up to inflation, often hiking the federal funds rate in big jumps. And it has always signaled that more work remains to be done. But when central bankers gather for their June policy meeting Tuesday and Wednesday, their agenda will be somewhat different.

The widely held expectation is that policymakers will leave rates unchanged this week to give themselves some time to see how the past year’s increases are filtering through the economy. Rate increases operate with a lag, and many economists argue that the drop in inflation over the past year has been driven largely by improvements in supply chains, gas prices returning to normal and the economic aftershocks of Russia’s invasion of Ukraine gradually fading away. That could mean the full toll of higher rates has yet to be felt.

Still, there are many sources of inflation that haven’t been tamed by the Fed’s moves. The housing market slowed as mortgage rates soared. But rent, which makes up a large share of the consumer price index, continues to be a major driver of overall inflation. Rent isn’t expected to simmer down until the volume of housing available significantly increases or until cooling in the rest of the housing market trickles down to leases. No one knows when that will happen.

Officials have not definitively said they have entirely finished raising rates, and incoming data on inflation, jobs and consumer spending will help them decide whether to make further increases in the coming months. Also significant will be information on banking lending, which has moderated since a recent shock to the financial system made lenders more skittish about issuing credit.

“A decision to hold our policy rate constant at a coming meeting should not be interpreted to mean that we have reached the peak rate for this cycle,” Fed governor Philip Jefferson said in a recent speech. “Indeed, skipping a rate hike at a coming meeting would allow the committee to see more data before making decisions about the extent of additional policy firming.” (Jefferson’s remarks carry added weight since he was nominated to the Fed’s No. 2 role last month.)

In Baltimore, Postman Plus Perry Hall is getting hits from all sides. The pack-and-ship store has seen costs of 250-foot rolls of bubble wrap nearly double. Transportation and shipping costs go up every few months, even since gas prices simmered down from the summer’s peaks. All of the store’s employees start at $15 already, but the hot labor market means they could earn higher pay elsewhere.

Owner Sharon Greenbeck has tried to absorb as much of the cost as possible. But looking at her small business, Greenbeck said it’s nearing time for her to pass higher prices on to her customers. She worries about how they will react. Already, customers raise an eyebrow if they want to send gifts to friends and the shipping ends up costing as much as the gifts. Greenbeck said she has even seen inflation encroach on the “little things.” For instance, the rubber ducks she would have in stock for children have doubled in price.

“I sell less because people say, ‘Oh, I’m not spending $2 on a duck,’” Greenbeck said. “So then my merchandise sits. It’s an ugly cycle.”

It's The Stupid Economy

Cynical Mike would like to point out that economists have accurately predicted 14 out of the last 3 recessions.

They don't call it the Dismal Science for nothing.

And I'll throw in an extra coupla cents: When they start talking about "the economy", there's going to be some pretty ridiculous rhetoric (dressed up to look like sound reasoning) coming from people who're advocating a political position instead of one that's based in the reality of normal everyday people just trying to make a living and have a little fun once in a while.

There are two starkly different ways of looking at the U.S. economy right now: what the data says has happened in the past few months, and what history warns could happen next.

Most of the recent data suggests that the economy is strong. The job market is, incredibly, better today than it was in February 2020, before the coronavirus pandemic ripped a hole in the global economy. More people are working. They are paid more. The gaps between them — by race, gender, education or income — are smaller.

Even inflation, long the black cloud in the economy’s sunny sky, is showing signs of dissipating. Government data released on Wednesday showed that consumer prices were up 5 percent in March from a year earlier, the slowest pace in nearly two years. Over the past three months, prices have risen at the equivalent of a 3.8 percent annual rate — faster than policymakers would like, but no longer the five-alarm fire it was at its peak last year.

Yet for all the good news, economists remain worried that a recession is on the way or that the Federal Reserve will cause one in trying to rein in inflation.

“The data has been reassuring,” said Karen Dynan, a Harvard economist and former Treasury official. “The things that we’re nervous about are all the things that we don’t have a lot of hard data about.”

Beginning with the banks:

Most of the recent data predates the collapse of Silicon Valley Bank and the upheaval in the banking system that followed. Already, there are signs that small and midsize lenders have begun to tighten their credit standards in response to the crisis, which, in turn, could push the businesses that are their clients to cut back on hiring and investment. The extent of the economic effects won’t be clear for months, but many forecasters — including economists at the Fed — have said that the turmoil has made a recession more likely.

The Fed began raising interest rates more than a year ago, but the effect of those increases is just beginning to show up in many parts of the economy. Only in March did the construction industry begin to shed jobs, even though the housing market has been in a slump since the middle of last year. Manufacturers, too, were adding jobs until recently. And consumers are still in the early stages of grappling with what higher rates mean for their ability to buy cars, pay credit card balances and take on other forms of debt.

The economic data that paints such a rosy picture of the economy is “a look back into an old world that doesn’t exist anymore,” said Ian Shepherdson, chief economist of Pantheon Macroeconomics.

Mr. Shepherdson expects overall job growth to turn negative as soon as this summer, as the combined impact of the Fed’s policies and the bank-lending crunch hit the economy, leading to job cuts. Fed policymakers “have done more than enough” to tame inflation, he said, but appear likely to raise rates again anyway.

Other economists, however, argue that the Fed has little choice but to keep raising rates until inflation is definitively in retreat. The recent slowdown in consumer price growth is welcome, they argue, but it is partly a result of the declines in the price of energy and used cars, both of which appear poised to resume climbing. Measures of underlying inflation, which strip away such short-term swings, have fallen only gradually.

“Inflation is coming down, but I’m not sure that the momentum will continue if they don’t do more,” said Raghuram Rajan, an economist at the University of Chicago Booth School of Business and a former governor of India’s central bank.

The Fed’s goal is to do just enough to bring down inflation without causing such a severe pullback in borrowing and spending that it leads to widespread job cuts and a recession. Striking that balance perfectly, however, is difficult — especially because policymakers must make their decisions based on data that is preliminary and incomplete.

“It is going to be extremely hard for them to fine-tune the exact point,” Mr. Rajan said. “They would love to have more time to see what’s happening.”

A miss in either direction could have serious consequences.

The recovery of the U.S. job market over the past three years has been nothing short of remarkable. The unemployment rate, which neared 15 percent in April 2020, is down to the half-century low it achieved before the pandemic. Employers have added back all 22 million jobs lost during the early weeks of the pandemic, and three million more besides. The intense demand for labor has given workers a rare moment of leverage, in which they could demand better pay from their bosses, or go elsewhere to find it.

The strong rebound has especially helped groups that are frequently left behind in less dynamic economic environments. Employment has been rising among people with disabilities, workers with criminal records and those without high school diplomas. The unemployment rate among Black Americans hit a record low in March, and pay gains have in recent years been fastest among the lowest-paid workers.

All of that progress, critics say, could be lost if the Fed goes too far in its effort to fight inflation.

“For this tiny moment, we finally see what a labor market is supposed to do,” said William Spriggs, a Howard University professor and chief economist for the A.F.L.-C.I.O. And the workers benefiting most from the labor market’s current strength, he said, will be the ones who suffer most from a recession.

“You should see from this moment what you are truly risking,” Mr. Spriggs said. With inflation already falling, he said, there is no reason for policymakers to take that risk.

“The labor market is finally hitting its stride,” he said. “And instead of celebrating and saying, ‘This is fantastic,’ we have the Fed hanging over everybody and casting shade on this unbelievable set of circumstances and saying, ‘Actually this is bad.’”

If that happens, the Fed may need to take much more aggressive action to bring inflation to heel, potentially causing a deeper, more painful recession. That, at least according to many economists, is what happened in the 1970s and 1980s, when the Fed, under Paul Volcker, brought inflation under control at the cost of what was, outside of the Great Depression and the pandemic, the highest unemployment rate on record.

The real debate isn’t between the relative evils of inflation or unemployment, argued Jason Furman, a Harvard economist and former top adviser to President Barack Obama. It is between some unemployment now and potentially much more unemployment later.

“You’re risking losing millions of jobs if you wait too long,” Mr. Furman said.

There have been some encouraging — though still tentative — signs in recent weeks that the Fed may be succeeding at the delicate task of slowing the economy just enough but not too much.

Data from the Labor Department this month showed that employers were posting fewer open positions and that workers were changing jobs less frequently, both signs that the job market was beginning to cool. At the same time, the pool of available workers has grown as more people have rejoined the labor force and immigration has rebounded.

The combination of increased supply and reduced demand should, in theory, allow the labor market to come back into balance without leading to widespread job cuts. So far, that appears to be happening: Wage growth, which the Fed fears is contributing to inflation, has slowed, but layoffs and unemployment remain low.

Jan Hatzius, chief economist for Goldman Sachs, said the recent job market data made him more optimistic about avoiding a recession. And while that outcome is far from certain, he said, it is worth keeping the current debate in perspective.

“Given the incredible downturn in the economy that we saw in 2020 — with obvious fears of a much, much, much worse outcome — if you actually manage to get back to a reasonable inflation rate and high employment levels in, say, a three- to four-year period, it would be a very good outcome,” Mr. Hatzius said.

So when you tell me you're not really into politics, what I hear you saying is that you'd rather let someone else make your decisions for you. Or maybe you're telling me you're too fucking stoopid to figure out some of the basics of living in the real world, or that you're just too fucking lazy to do the work necessary to keep a democracy healthy.

• The guys who decide the interest rates on your mortgage and your credit card - they're into politics.
• The guys who decide what you pay in taxes - they're into politics.
• The guys who decide they get to fuck up your favorite national park with drilling and mining and logging - they're into politics.
• The guys who decide your street doesn't really need work because some other guy - who is into politics - gets to go ahead of you, even though yours needs it way more than his - those guys are into politics.

The Economy

This should mean the owners and managers can be convinced to throw workers a nice bone. Like Paid Time Off, and Insurance, and a better hourly rate, along with normal regular shifts that add up to a solid 40 hours a week, and an end to the "right-to-work" bullshit that torpedoes the right to unionize.

It's about fucking time we honor the debt to people who actually work for a living.

What Recession? Some Economists See Chances of a Growth Rebound.

The Federal Reserve has raised rates rapidly. But instead of cracking, some data point to an economy that’s thriving.

Many economists and investors had a clear narrative coming into 2023: The Federal Reserve had spent months pushing borrowing costs rapidly higher in a bid to tame inflation, and those moves were expected to slow growth and the labor market so much that the economy would be at risk of plunging into a downturn.

But the recession calls are now getting a rethink.

Employers added more than half a million jobs in January, the housing market shows signs of stabilizing or even picking back up, and many Wall Street economists have marked down the odds of a downturn this year. After months of asking whether the Fed could pull off a soft landing in which the economy slows but does not plummet into a bruising recession, analysts are raising the possibility that it will not land at all — that growth will simply hold up.

Not every data point looks sunny: Manufacturing remains glum, consumer spending has been cracking, and some analysts still think a mild recession this year remains likely. But there have been enough surprises pointing to continued momentum that Fed officials themselves seem to see a better chance that the nation will avoid a painful downturn. That resilience could even be a problem.

While a gentle landing would be a welcome development, economists are beginning to ask whether growth and the job market will run too warm for inflation to slow as much as central bankers are hoping — eventually forcing the Fed to respond more aggressively.

“They should be worried about how strong the U.S. labor market is,” said Ajay Rajadhyaksha, the global chairman of research at Barclays. “So far, the U.S. economy has proved unexpectedly resilient.”

The Fed has lifted rates from near zero early last year to above 4.5 percent as of last week — the fastest series of policy adjustment in decades. Those higher borrowing costs have translated into pricier car loans and mortgages, and for a while they seemed to be clearly slowing the economy.

But as the central bank has shifted toward a more moderate pace of rate moves — it slowed the speed of its increases first in December, then again this month — markets have relaxed. Rates on mortgages, for example, have come down slightly.

That’s showing up in the economy. Mortgage applications have been bouncing around, but in general they have ticked back up. New home sales are now hovering around the same level as before the pandemic. Used car prices had been declining, but they have begun to rise at a wholesale level — which some economists see as a response to some returning demand for those vehicles.

And while retail sales and other measures of household spending have been pulling back, according to recent data, several nascent forces could help to shore up consumer demand into 2023 — with potentially big implications for the Fed’s battle against inflation.

Social Security recipients just received a sizable cost-of-living adjustment in their first check of 2023, putting more money in the pockets of older Americans. More than a dozen states, including Virginia, California, New York and Massachusetts, sent tax rebates or stimulus checks late last year. And while Americans have been working their way through the excess savings that were amassed during the early pandemic, many still have some cushion left.

“Such employment gains mean labor income will also be robust and buoy consumer spending, which could maintain upward pressure on inflation in the months ahead,” Christopher Waller, a Fed governor, said on Wednesday.

There is no guarantee that those factors will be enough to counteract the large amount of policy adjustment the Fed has done over the past year. Technology companies have already begun to lay off workers. Lower-income consumers have burned through their savings buffers more quickly than higher-income people, leaving them with less wherewithal to shop.

“I don’t think we’re re-accelerating,” said Nela Richardson, chief economist at the payroll and data company ADP. “You can have a strong labor market and slow economic growth.”

But the possibility that the economy will not grow as modestly as expected is a risk for the Fed.

Inflation has been cooling in recent months, partly because prices for used cars and some retail products have outright dropped, subtracting from overall price increases.

But if auto dealers and retail stores like Walmart and Target feel that they can stop slashing prices as demand stabilizes and they work through bloated inventories, it could keep inflation from slowing as steadily, said Omair Sharif, founder of Inflation Insights.

“The concern is now you shift to a situation where that downward pressure goes away,” he said. “Wages are still supportive of people buying more stuff.”

Jerome H. Powell, the Fed chair, acknowledged during a news conference last week that some of the drag on inflation from goods could be “transitory,” meaning that it will fade away. That is, in part, why central bankers are closely watching what happens in other sectors, particularly services.

Lower-income consumers have burned through their savings buffers more quickly than higher-income people, leaving them with less wherewithal to buy things.Credit...John Taggart for The New York Times

One major service cost — rent — does look poised to decelerate this year. But both the extent and the timing are enormously uncertain: Some economists think that rent increases will slow in official inflation data within the coming months, while others are expecting the change to come much later.

Lael Brainard, the Fed vice chair, suggested in a recent speech that rent inflation might not decline until the third quarter of 2023, which stretches from July through September.

The trajectory for other service prices, from child-care to restaurant meals, is expected to hinge on what happens with the labor market. Wages tend to be a major cost for service companies, and if pay is climbing swiftly, businesses may charge more. Workers who are taking home bigger paychecks may be able to keep spending through those cost increases.

To be sure, inflation and wage growth have slowed in recent months even with very strong hiring. Fed officials have embraced that, and they have made clear that they’re focused on what happens with inflation rather than aiming for a specific increase in unemployment.

But several have expressed doubts that wage and price moderation can continue with labor demand so robust and a jobless rate at 3.4 percent, the lowest since 1969. Companies will be left competing for a limited pool of workers. And given that today’s disinflation is coming partly from product price declines that are not expected to continue indefinitely, slowing down services prices is crucial.

“The services sector, really, except for housing services, is not really showing any disinflation yet,” Mr. Powell said this week.

The question for the Fed is how much more policy adjustment is needed to ensure that the economy and inflation return to a sustainable pace. The central bank has forecast that it will make two more quarter-point rate increases.

John C. Williams, the president of the Federal Reserve Bank of New York, indicated on Wednesday that quarter-point moves were likely to remain the norm, but he suggested that rates might have to adjust by more if demand and price increases stayed elevated.

“Demand in our economy is much stronger right now than you might expect in a regular, prepandemic situation,” Mr. Williams said, attributing that to fiscal support, a strong labor market and other factors. How high rates must climb in order “to be sufficiently restrictive has got to be influenced by that.”

Although many business leaders are still watching consumers warily, some of them have suggested that impediments to growth are fading. The S&P 500 as a whole has been recovering over the past six months, a sign that investors see a sunnier outlook on the horizon.

Ryan Marshall, chief executive officer of the homebuilder Pulte Group, suggested in an earnings call last week that the housing market was noticeably improving.

“Despite the higher-rate environment dominating the national conversation, we saw buyer demand improve as the fourth quarter progressed and can confirm this strength continued through the month of January,” he said.

And David B. Burritt, the chief executive of U.S. Steel, said in a recent earnings call that he expected “prices will be sustainable and higher” in the longer-term as headwinds to growth fade.

“We’re in this transitional period with a lot of uncertainty,” he said, “and frankly I think a lot of people think the Fed is doing a lot better job on this soft landing than what was expected.”

Neil Dutta, head of U.S. economics at Renaissance Macro, said that the re-acceleration signs in the economy were “undeniable,” and that inflation could get stuck at unusually high levels as a result — forcing the Fed to keep rates high for longer than expected.

“They’ve been raising rates for a while,” he said. “All they have to show for it is an unemployment rate at 3.4 percent.”