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Betsey Stevenson
@BetseyStevenson
I was certain that sparing people the pain and permanent loss that occurs with unemployment, that rising wages and employment, was worth higher prices. I failed to understand just how much anger high prices would bring.
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Betsey Stevenson
@BetseyStevenson
Economists are going to have to reckon with the fact that the public would have preferred a slower recovery with much higher unemployment, as long as prices had been stable.
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David States MD PhD
@statesdj
How much of this is driven by the run up in housing costs relative to wages. The dream of retiring in a home that you own outright now seems unattainable for most people. Housing costs seem like a major driver of blue state to red state migration, literally voting with your feet
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Ben Ogorek
@BenOgorek
Not sure why there were massive stimmies going out in March 2021 with the unemployment rate at 6.1% and falling like a rock.
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Antal Poland
@AntalPolska
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#!/usr/bin/env Rscript
@RandVegan
none of these takes are rooted in reality. housing costs went of control. its the largest line item of many house holds. It has nothing to do with this academic debate of the pace of recovery and unemployment rates. its rooted in policy failures.
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Changy
@itschangylol
From ya boi Kashkari. You don’t even have to go back that far in our own country’s history to see this and what happened to the incumbent
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Marty Manley 🇺🇸 🇺🇦 ✡️ 🌎 🚴‍♂️⌚
@MartyManley
Inflation hurts everyone a bit. Unemployment hurts a few people a lot -- often vulnerable people. the political calculation would favor more generous unemployment insurance than stimulus. Not sure about the economic calculation...
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TakingHayekSeriously
@FriedrichHayek
The economists who advised Trump, Biden, the Congress and the Fed got the science wrong here -- economics professors are too incredibly arrogant to carefully deliberate on how their science here is catastrophically in error.
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Sam
@SamB30629623
"I was certain that sparing people the pain and permanent loss that occurs with unemployment, that rising wages and employment, was worth higher prices." Such benevolence from our wise central planners. Thank you so much for making these decisions for us.
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David Doney
@David_Charts
Disagree. Nobody knows that wages and net worth have outgrown inflation. Economists should build stronger relationships with reporters to get the truth out.
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David Doney
@David_Charts
11 of 12 key economic measures are better than when Biden started, even adjusted for inflation ("real"). 9 of 12 better than pre-pandemic. I prefer comparing 2019 and 2023 full-year data, but this point-in-time comparison is helpful too. All data from FRED.
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Tom Doyle 🐢🏴󠁧󠁢󠁳󠁣󠁴󠁿🇲🇳🇪🇸🏴󠁧󠁢󠁥󠁮󠁧󠁿
@tcddoyle
It also gave the misinformation specialists in the Right Wing echo chambers a ready-made excuse to continue hammering “the Biden economy is terrible” framing.
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Don Linn
@DonLinn
You're deep in the weeds. The source of the problem is wildly uneven income distribution which disproportionately (a) raises expectations of and (b) penalizes working and poor families. I'm not a Marxist, but is apparent that something is inherently wrong systematically.
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Larry Stevens
@lfstevens
Unemployment is local - most of the pain hits the individuals that lose their jobs. Inflation is general - it hits everybody living on a budget.
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aaronshem
@aaronshem
Wages have increased with and exceeded inflation for tiny subset of the population. The rest did not keep up. Wages did not keep up during the worst of the inflation. Not to mention, inflation metrics are highly politicized and haven’t been very representative of real world
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Crémieux
@cremieuxrecueil
Here's a very simple theory of why the Democrats lost so decisively: Their recent economic wins primarily benefitted low-turnout groups of voters and the people who actually vote felt they were harmed.
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Daniel T
@DanielTobias_
I think it's that inflation causes widespread pain and the remedy is also painful. Unemployment hurts like 10% of the population - disproportionately hurts low propensity voters - and government comes to the rescue with stimulus
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TakingHayekSeriously
@FriedrichHayek
It was all unnecessary, and based on bad economics from economics using pseudo-scientific fake science models which Hayek debunked in his Nobel address.
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Ryan Bourne
@MrRBourne
NEW PIECE: Three Faulty Policy Lessons for Democrats on High Inflation. No, the problem wasn't cost-inflating mandates, nor the absence of price controls, nor the public undervaluing low unemployment. It was excessive macroeconomic stimulus. (link in next tweet)
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Ken Bannan
@bannan_ken
We were never going to get much higher unemployment as the largest generation in history removes themselves from the workplace. Let's not pretend these are "new jobs".
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Stefanie Stantcheva
@S_Stantcheva
We actually did an experiment on this in our paper -- and we found that people put on average twice the weight on a percentage point increase in inflation than on unemployment. socialeconomicslab.org/research/worki With summary thread here:
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Stefanie Stantcheva
@S_Stantcheva
📈Inflation is hard to understand! It has complex causes, consequences & trade-offs. Our new paper with @FraNuzzi98 & @Al_Bi99studies how people understand inflation & what they want the government to do to fight it. Short summary thread 🧵👇 socialeconomicslab.org/understanding_ 1/
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Antal Poland
@AntalPolska
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Nominal News
@NominalNews
I think if we look at the post tax/transfer incomes, we will see a decline in real incomes after the expiry of multiple programs. People are worse off than 2/3 years ago.
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Printing Center of Excellence 🌐🇺🇸🇧🇩
@arnoblalam
You’ve got to be honest with voters about this stuff. First economists said there was no inflation. Then they said it was transitory. Then they said that since wages rose more, it doesn’t matter.
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Ryan Herzog
@RyanWHerzog
Do you think it was anger around prices? My working theory, people experienced vastly different rates of inflation compared with official data. This, combined with not understand how inflation is measured led them to distrust government data.
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Duky Le Mook
@UkyDuky8
An election that was (in spite of all of the breathtaking headlines) very, very close is a bad signifier for anything beyond the general vibes of the candidates. Voters would have been very angry about high unemployment too.
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CursedKnives
@Tlacuwise
Of course. People imagine that THEY wouldn’t have been unemployed. Unemployment, deportation, harassment — all of those are things that could happen to “them”. Not me - oh my, no. And no one cares about “them”. But if the pain is evened out, that makes “them”… “us”.
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Lenny Mendonca
@Lenny_Mendonca
That’s too definitiveGreat recession’s slow recovery led to extended misery and anger. Today’s bogeyman of “inflation” Is just shorthand for economic anxiety from surface level polling. Not to mention there is no US counter factual and European slow recovery led to as much anger.
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Orange Juche
@OrangeJuche
It's a generational crisis when 10% of working Americans are unemployed. What we failed to account for was that the remaining 90% remained employed, and could purchase a lot more labor from the desperate 10%.
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Chuck Marr
@ChuckCBPP
I think it's good to reflect & to learn -- but here I would also add that it will be important not to over-learn. While possible, it's highly unlikely the next crisis will look like the last one where supply was so constrained. Over learning could hurt a lot of people.
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Grant Gregory
@GrantrGregory
Tbf, your job as an economist is to tell us what would happen to the economy under XYZ policy scenario. It’s the campaign’s job to communicate those policy choices to voters, and they largely failed in that regard.
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Ren
@renzheng09
Maybe the demand side economy always have this issue? Unevenly distributed wealth creates frustration. People who bought house during the COVID probably wouldn't complain about inflation too much.
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MC
@burntbulb
I'm workshopping the idea around people who know more about economics than me that the "freest" variable political capital-wise in a short-to-medium time-scale supply shock (like the pandemic) is actually availability; i.e., do stimulus, but implement price controls.
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Primed Primate
@primedprimate
I think this is analogous to how firms have realized that laying off a few workers is better than cutting wages/hours for all workers. Concentrate the pain on a few. As government policy, it's terribly inegalitarian, but it's certainly more popular.
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tuan nguyen
@_tnguyen87
i think part of the explanation has to be how far removed the great pains of the 2008 recessions were. most voters have completely forgotten how bad it could be if you go unemployed for months on end. by the time the next recession hits, i feel like we will remember
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James Gendron
@GendronJames
I think it’s possible if this had been adequately explained to people ahead of time, they might have agreed to the tradeoff. As it stands, I don’t think most people perceive that it was that. They just know they hate inflation
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Tom Barson
@tbarson49
Betsey, thank you. The election, in a sense, can be thought of as a rebuke to 'Team Transitory' (I'm focusing just on 2022) and it's good to see recognition that better policy-impact work is needed.
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David Frank Writes
@David_N_Frank
Most people would have been okay if active efforts had been made to constrain inflation. The ARP in 2021 ADDED 2 to 4% and that lasted for nearly an entire year. It far outweighed the jobs it directly accelerated. And the IRA had minimal impact in short term - more long term.
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Omar Sultan
@omarsultan
Unemployment is a "you" problem while $3 eggs is a "me" problem and we seem to have a deeply diminished capacity for empathy these days.
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David Doney
@David_Charts
I do this slide deck every month. Work with WaPo or NYT to pretty it up. They’ll listen to you as a pro economist.
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David Doney
@David_Charts
🧵Monthly economic update, through the September data. We added a robust 254,000 jobs in Sept. We are now 6.8 million jobs above pre-pandemic peak, regained in June 2022. 1/
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Catherine
@C_is4Catherine
I wonder if there was a solution that would have made everyone happy? Too often, as an electorate, we want to have our cake and eat it, too.
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Matt Majeune-Fagan
@MattMajeune
I’m right there w/ you underestimating the anger inflation would cause. At the same time, there was no choice between stable prices and unemployment, since most inflation was due to supply shock. I hope economists can hold onto that context too when we face the next recession
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GmanForthePeople
@Epictetus111
Dems did not do a good job clarifying this, and that inflation was global and caused mainly by supply chain and mfg issues. + margin expansion. I thought this all along.
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PrezValyou
@Cd768ckd
Yes. But we have broad govt powers to address inflation pain beyond (and preferable) to allowing higher UE
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Sam Pooley
@spooleyhi
Your model seems to say a) that economic recovery efforts by Biden were a primary cause of inflation; b) there were policy trade-offs in post-pandemic supply chain pricing; and c) people had an understanding of the trade-offs (if any). I doubt it.
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Steven Sheffrin
@ssheffrin
Uneven inflation upsets expectations, affects virtually everyone, and creates distrust of institutions. This inflation was not inevitable and was warned against by top macroeconomists outside the White House (Summer/Blanchard)
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James Young
@YoungEcon
It might be that case, but they also are probably not considering the likely counterfactual. A similar case is why "bailouts" that prevent a bank run are always politically unpopular. Preventative policy that is successful with a clear cost is politically difficult.
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JellyKind
@JellyKind
It feels like there's no point in doing anything but price control any more. We are a nation of goldfish.
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Joe Effex 🕙
@jofx
Here's the thing about the capitalist econopolitical system, I think— for powerful reasons, "growth" always accumulates disproportionately at the top of the distribution; rapid "growth" results in greater poverty or at least relative deprivation. ✌️
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Johnny5 Need Input
@Mrfphy
Is the point of economics to make people happy, or to increase gdp? (This is a real question) To what extent should the answer to this bear on the good faith of the entire swath of potential leaders of a country?
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Chris
@chore_leo
It's not high prices. It's repeated insistence that high prices are the problem that is the problem. It's the media diet.
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Sinclair Desaud
@sdesaud
Apparently people think they are responsible for getting a job, a better job, or a raise; they don't think government policies play a role. But they see problems like higher prices and just get unhappy with government. Blamed for the problems and no credit for the solution.
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Your Most Political Friend
@Realest_RichT
I mean there has to be ways to talk about these things in the moment that makes them digestible and more easy to understand. Amid rising inflation, couldn’t there have been a messaging strategy? I don’t know. There has to be a way to talk about these things
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Andrea Roman
@andreajroman
There is uneven wage growth across the country. Thinking especially about those states or counties where the minimum wage has not kept pace its costs. The local experience of the gap between prices and wages is more important than the average across the country.
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Dan Burnett
@RocCityBuilt
How old are you? If you remembered that late 70s and early 80s, as I do, you would have known how much people hate it. I was in high school then so didn’t impact me directly but I remember the white hot anger of my parents and their friends. People really, really hate inflation
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Dan Elbert
@DanElbert5
When the economy is booming, people can't imaging losing their job. In particular if the message was not there.
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Kevin Harris
@kjh1138
The average person doesn’t see themselves as a person who absent policy would be unemployed. They just see the higher prices.
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Mike Cane
@mikecane
Cat food doubled in price, everything else 25-50% higher. My monthly budget had surplus. Now it's a damn deficit! Damn right we're all mad AF!
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Rollander
@Deficit_Hawk
they did it slower and had lower growth in Europe. Incumbent parties got slaughtered typically. There was no magic method, people hate inflation.
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Dennis R Bullock
@DennisRBullock1
But don't you think the narrative is the issue, as portrayed by media? It's not about preference, but perception. Few in media understand inflation (look at the conflation of slowing inflation & bringing down prices). And Americans hadn't experienced high inflation in 40 yrs.
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