Arguments about how how people *should* feel about the economy can sometimes be based on inconsistencies in the standards for assessing different factors like job growth and wage growth.
In some respects people may be more consistent/coherent than the experts.
In some respects people may be more consistent/coherent than the experts.
Caricaturing the argument you hear: "jobs are growing rapidly & real wages are up relative to prepandemic, so everyone should be happy."
But note the job claim is about what is happening in recent months (the change) while the wages claim is over the entire period (the level).
But note the job claim is about what is happening in recent months (the change) while the wages claim is over the entire period (the level).
Real wages have been falling lately. If you point that out many (reasonably) argue that real wages rose a lot in 2020 & you should include that too.
I mostly agree and most of my wage analysis/discussion focuses on the full period. piie.com/blogs/realtime…
I mostly agree and most of my wage analysis/discussion focuses on the full period. piie.com/blogs/realtime…
But some will also point to the 6.6m jobs created over the last year as evidence that the economy is doing really well. There is a lot of merit to this view but the analogous argument applies: this is a partial bounceback from 2020 job losses and we're still down 2.9m total jobs.
A reasonable statement of the facts is:
1. If you judge by the whole pandemic period, the economy is in worse shape than it was in Feb 2020. That is not at all a controversial or surprising given the massive pandemic that is still here & the sharp 2020 recession.
1. If you judge by the whole pandemic period, the economy is in worse shape than it was in Feb 2020. That is not at all a controversial or surprising given the massive pandemic that is still here & the sharp 2020 recession.
2. If you judge just by the recent trajectory, the jobs and GDP have been growing very rapidly but real wages have been falling as inflation has outstripped wage gains.
3. If you judge compared to historical benchmarks, the recovery has been much more rapid than any previous recession.
If you judge compared to other countries, the GDP recovery has also been much faster but the employment recovery has been worse and inflation has been higher.
If you judge compared to other countries, the GDP recovery has also been much faster but the employment recovery has been worse and inflation has been higher.
I can see the argument for expecting households to assess the economy using the entire pandemic period or using recent changes.
But don't bemoan household attitudes just because you unconsciously shift the yardstick to whatever works best for each variable and they don't.
FIN
But don't bemoan household attitudes just because you unconsciously shift the yardstick to whatever works best for each variable and they don't.
FIN
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