🧵Monthly economic review, with data through February. Biden continues setting one economic record after another, despite the Fed's best efforts to slow the #BidenBoom. 1/
On most key measures adjusted for inflation, we're in better economic shape now than 2019 pre-pandemic. The unemployment rate hit 3.4% in Jan, lowest since '69, then popped back up to the 15 month average 3.6%. Jobs level, real GDP per capita, real net worth...all better. 2/
Perhaps the most important economic measure is jobs from the Establishment Survey:
✅+3.0 million above the pre-pandemic peak.
✅+12.4 million since 1/21
✅+495k avg Biden job creation / month; president with most job creation total is Clinton, who averaged 239k / month. 3/
Wage for production & non-supervisory workers have outgrown inflation if the starting point is pre-pandemic.
Yes, you have higher real wages (more purchasing power) now than in the vaunted 2019 economy, despite inflation! 4/
In fact, President Biden has the highest average real wages (2022$) of any president LBJ to present.
Note also that Carter had real wages nearly $2/hour higher than Reagan, despite the criticism he faced about inflation. 5/
One of the reasons we have inflation is because consumers have so much money to spend. This is a combination of stimulus checks, child tax credit, big wage gains, and not spending on services 2020-2021. Middle 20% has about $10,000 more saved than pre-pandemic trend. 6/
While we're seeing news reports about the amount of debt consumers are taking on, delinquencies on auto, credit card, and mortgages remain historically low, although they have risen recently. 7/
NBER is the organization that calls economic peaks / recession starts. However, 5 of the 6 key measures they use are up since June '22, and all 6 are up six December '21. These indicate growth, not recession. 8/
CBO released the annual "Budget and Economic Outlook" -- always fascinating to econ nerds.
CBO forecasting a recession in 2023, with near-zero growth, higher unemployment, and slowing inflation.
I think '23 will look more like '22 than forecast. 9/
The long-term budget situation is simply that expenses (outlays) grow faster than revenue as % GDP. Outlays increase driven by aging, healthcare inflation > GDP growth, and higher interest on debt. 10/
However, it's easy to argue we have a revenue problem not a spending problem.
Tax expenditures (discounts vs. table rates) are forecast at a whopping 7.4% GDP in 2023; top 20% get half that.
Budget deficit in 2022 was 5.5% GDP, or 3.8% GDP ex student loan forgiveness. 11/
Yes, we have a big revenue problem here: IRS estimates tax cheats cost Treasury about 2% GDP per year or around $500 billion, mainly from the rich. The IRA invests in IRS to help collect this money from rich deadbeats; Republicans crying foul. 12/
The Social Security shortfall (revenue < outlays) for next 75 years is about 1.7% GDP on average.
For scale:
7.4% GDP tax expenditures
2.0% GDP tax collection opportunity
2.0% GDP Trump tax cut reversal
1.1% GDP Removing cap on payroll tax. 13/
This table helps translate the gigantic economic and budgetary by displaying per household, % GDP, etc.
Callouts:
$135T household net worth; $5T of that belongs to bottom 50%.
----vs.-----
$30T national debt
Yes, plenty of money at the top to solve deficit "problem." 14/END
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🧵So far, consumer sentiment under Biden has been about 27% below what historical economic conditions would predict on average; it was 0% different for Trump.
The Apr '24 sentiment score was 77, when conditions merited a 93, about a -16% difference.
I'll explain method. 1/
We need an equation relating historical economic conditions pre-pandemic to U of M sentiment. We can use the misery index (inflation + unempl) for conditions. I'm using 100 - Misery Index so both variables are positive. 2/
We can now generate a predicted sentiment score based on the equation above, using the 100 -Misery Index score as the x variable. That gives us the chart below. 3/
🧵Monthly economic review for March data. First, record 158 million with jobs, setting new records monthly since June 2022, when pre-pandemic peak regained. Biden has fastest monthly job creation of any president in # terms, 400k from start and 275k from July 2022. 1/
The unemployment rate was a very low 3.8% in March, the 26th straight month below 4%, a more than 50-year record per CEA. The rate has averaged 4.18% under Biden, essentially tying him for first place with LBJ for lowest of any president 1964-present. 2/
The jobs # come from the Establishment (Employer) Survey, while the unemployment data comes from the Household Survey, which was a rare "all-positive" in March! Nearly 500,000 more employed than February. 3/
🧵The Economist did a cover article on how great the U.S. economy is. First, real (infl-adj) GDP +8% vs. 2019, making "America...the only big economy that is back to its pre-pandemic growth trend." 1/ economist.com/briefing/2024/…
This strong growth happened with inflation falling, which economic theory says is unusual.
Why? Cushions" from the big deficits in 2020-2021 (e.g., excess savings still getting spent) and consumers & corporations who locked-in lower interest rates before hikes. 2/
Much of the excess savings (which peaked around $2T and is now around $400B) is at the top, the top 20% lately have accounted for 45% of consumption, up from 39% pre-Covid. This includes travel and luxury goods. 3/
🧵State of the Union economic briefing; the key facts you need about the economy. First, monthly job creation over 50% faster in 2023 than 2019, the most comparable pre-pandemic year. 1/ fred.stlouisfed.org/graph/?graph_i…
Unemployment rate averaged 3.6% in 2022 and 2023, both lower than pre-pandemic 2019. You have to go back to 1969 for a 3.5% year. 2/ fred.stlouisfed.org/graph/?graph_i…
Black unemployment reached the lowest ever in 2023 at 5.5%. Hispanic unemployment reached the lowest ever in 2022 at 4.2%. 3/ fred.stlouisfed.org/graph/?graph_i…