December 07, 2023
New York Times columnist Steve Rattner told readers that people think the economy is terrible and then gave some not very plausible reasons why. As Rattner explains:
“As I’ve engaged with my many interlocutors, I’ve concluded that voters have valid reasons for their negativity. In my view, blame two culprits: one immediate and impacting everybody, and another that particularly affects young people and is coming into view like a giant iceberg. Both sit atop the leaderboard of reasons for the sour national mood.”
Okay, first on Rattner’s list, people care about inflation, not jobs.
“To them, higher prices just means less spending power. A recent Blueprint/YouGov poll on the economy found that just 7 percent of respondents were principally concerned about the availability of jobs, while 64 percent were most worried about prices.
“The problem for President Biden is that by a margin of 43 percent to 23 percent, voters believe that he is more focused on jobs.”
Let’s apply a little common sense here. Let’s imagine that people care about both prices and jobs. Right now, because of Biden administration policies, unemployment is very low, so people have jobs. That means they probably are not worried about jobs.
It’s sort of like if you had a patient with a heart problem and a bad knee. After the doctor prescribes a medication that addresses the heart problem, it’s likely that they will be primarily worried about their bad knee. That doesn’t mean they didn’t care about their heart problem, it just means that for the time being, their heart problem is under control.
We also get the refrain that people expect prices to come down. We keep hearing that line in the media. Suppose some number of people expect pigs to fly.
Would we see the line repeated endlessly that people expect pigs to fly? My guess is that we would see some number of pieces ridiculing the fact that some people are expecting the impossible. Then the media would stop reporting it, rather than what we see now where the media continually repeats the idea that people expect prices to go down.
For what is worth, virtually no one expected prices to go back down in the 1980s after the 1970s inflation. And, a point that Rattner neglects to mention, wages have been outpacing prices, so people’s purchasing power has been increasing. That was not true in the 1980s when the media were celebrating the “Reagan boom.”
Then we get to the long-term story.
“The longer-term issue that bubbles up from polls and other data is deep pessimism about the future. Uncharacteristically, a stunning majority of Americans now believe that the next generation is likely to have a lower standard of living.
“A Wall Street Journal-NORC poll from March found that just 21 percent of respondents felt confident that life for their children’s generation will be better, matching the record low since this question was first asked.”
Actually, pessimism about the future is not uncharacteristic. A poll taken in March of 1998, when the economy was in the middle of a five year long boom, found that the number of people who thought that life would be better in the next century was tied with the number of people who thought it would be worse, at 36 percent each.
Rattner’s next step in making his case is that more young people are living at home.
“Consider one marker of generational progress: moving out. Nearly half of all Americans aged 18-29 live at home with their parents, the highest share since the Great Depression.”
Rattner is playing more than a bit fast and loose here. The share of young people living at home was rising through most of the last decade. It jumped during the pandemic, and has been trailing downward in the last year.
He also tells us that high house prices and high interest rates make it difficult for young people to buy homes. That’s true, but until interest rates jumped last year, the number of young people owning homes was increasing and it’s still above pre-pandemic levels. Perhaps Rattner thinks high rates will persist indefinitely, but he is very much in the minority on that point.
Then we get to the big kicker:
“Even more fundamentally, voters — admittedly, not economists — may deserve credit for at least subconsciously comprehending two immense longer-term challenges: lagging productivity and a huge and fast-rising national debt.”
It’s a bit hard to believe that anyone who has followed the economy for the last five decades would cite slow productivity growth as a reason for the current pessimism about the economy. We’ve had slow productivity growth for most of the last half century, why is it just now bothering young people?
The other irony of this comment is that we just got a report showing that productivity grew at an incredibly fast 5.2 percent annual rate in the third quarter. No one expects this pace to continue, and the productivity data are highly erratic, but it is a bit bizarre right now to be claiming that slow productivity growth is the reason for people’s discontent.
Then we get the national debt. The fact is, no one has any clue what the size of the national debt is. If it were half its current size it would still sound like a huge number to people. It’s pretty hard to believe that many people have looked carefully and thought about the consequences of the national debt, although hearing politicians and pundits whine about the debt may have scared them.
If they did want to worry about something that would cost them real money, they might worry about the trillions of dollars they will pay out in future years to drug companies, medical equipment suppliers, and other companies that have government-granted patent and copyright monopolies. But, the recipients of these rents are probably Steven Rattner’s friends, and they don’t allow for such things to be talked about in the New York Times anyhow.
Ironically, Rattner doesn’t mention global warming. The damage that we are doing to the planet gives young people very serious grounds to be worried about the future. But I suppose preventing environmental destruction doesn’t matter to Rattner.
Anyhow, it is possible to make a case in the NYT that things are really bad right now and people should be worried about the economy. It may not be a very solid case, but who cares?
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