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Last Thursday, the Bureau of Economic Analysis released its advance estimate for 2024’s first-quarter real GDP growth. At 1.6 percent, it is the worst quarterly performance since the economy contracted by 0.6 percent almost two years ago in the second quarter of 2022. This was a growth level one-third below economists’ expectations of 2.4 percent. It is also a precipitous drop from 2023’s fourth quarter rate of 3.4 percent and 2023’third quarter rate of 4.9 percent.

This slower growth comes on the heels of higher inflation. The March report on overall prices showed the Consumer Price Index for all Urban Consumers rose 3.5 percent over the last year — 3.8 percent when core inflation (minus food and energy) was considered. That figure was higher than any since September 2023 and marked the third consecutive monthly increase.

Then on Friday, came more bad inflation news, this time on personal consumer expenditures excluding food and energy. This is the Federal Reserve’s preferred inflation gauge, and in March it rose 2.8 percent compared to a year ago — the same as in February and above expectations.

This jujitsu juxtaposition of higher inflation and lower growth must not be underestimated. Gone is the charade of someone who has effectively never worked in the private sector telling working Americans how good the economy is. Joe Biden, who loves to harken back to blue-collar Scranton roots, should have known better. Americans now do.

There is but one real measure of the economy for them: Am I putting more on my family’s table? Inflation’s insidious impact is its cumulative effect. Just because inflation’s rate of increase slows (which it isn’t) does not mean its past effect is wiped away (which it’s not). Now the economic growth that the administration hoped would at least outstrip inflation’s increase — and reverse some of that cumulative effect — is not.

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The mix of local residents visiting the Enfield Food Shelf in Connecticut has changed a lot in the last few years.

Prior to the Covid-19 pandemic, many were elderly or disabled people on fixed incomes, said Kathleen Souvigney, the food pantry’s executive director for the past decade.

But now, more of the folks seeking assistance are working families who are struggling to make ends meet as their cost of living skyrockets. Paying for child care, housing, cars, heating and other basic needs doesn’t leave enough money these days for food, which has also risen sharply in price, Souvigney hears time and time again.

“Most of the new folks are working families,” she said. “Many of the jobs aren’t paying enough to take care of expenses and put away a little savings. It now seems that one unexpected expense tips people’s finances.”

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Although the US economy is strong by many measures, millions of Americans still can’t afford to buy enough food for themselves and their families. The share of people turning to hunger relief programs remains higher than it was prior to the pandemic.

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In 2021, credit companies loosened the qualifications for who could get credit cards and more people opened new accounts. Gen Z members opened new credit-card lines at a faster rate than other generations during the pandemic. Nearly 5% of consumers 27 or younger had opened at least one new credit-card account in March 2020, according to data from VantageScore. By March of this year, that figure had dropped to 3%.

That trend has resulted in a greater use of credit cards overall: Of those with an open loan or credit line, Gen Z members were more likely to have at least one credit card compared with millennials a decade ago, says TransUnion’s report.

The shift might also have been fueled by members of Gen Z who grew up as authorized users on their parents’ credit cards in the hope that, by the time they turn 18, they would be able to borrow money on their own more easily, Wise said.

Gen Z members also benefited from rising credit scores during the pandemic. The influx of cash from stimulus checks and fewer opportunities to spend money made it easier for consumers to pay down their debt and stay on top of their bills.

As interest rates have climbed over the past two years, those credit scores have taken a hit. The drop was most drastic for millennials with credit scores between 660 and 719, whose scores fell by 26 points. Gen Z wasn’t far behind. The average credit-score change for Gen Z with credit scores above 720 fell 24 points during that time period, according to Credit Karma.

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The recent uptick in US inflation appears to have reversed any progress President Joe Biden has made in convincing voters he can do a better job of managing the economy than Donald Trump.

The poll, conducted between May 2 and May 6, finds that — after a slight uplift in April — Biden’s approval ratings on the economy fell back to levels that will make for depressing reading among the White House’s incumbents. That comes after price data showed US inflation might prove stickier than anticipated at the start of the year.

The findings add to the sense that the Biden administration’s messaging on the economy — much of which has been focused on gains US workers have seen to their wages — is not convincing voters.
Voters dislike Bidenomics

While economists and investors are trumpeting the stellar performance of US growth over the past 18 months, voters are not.

The poll shows 71 per cent of the 1,000 respondents believe economic conditions are negative. The figure is in line with earlier months, signalling that it has little to do with the news that growth slowed to an annualised rate of 1.6 per cent, down from 3.4 per cent in the fourth quarter of last year.

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Originally posted by THG:
T

Much Higher Interest Rates for Much, Much Longer

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Originally posted by second:
Inflation continued to slow down in April from its recent surge.

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Originally posted by 6ixStringJack:


Also Vox,

To fix the economy, let's print money and mail it to everyone

https://www.vox.com/2014/9/9/6122517/helicopter-drop-money-print-fed-b
lyth-lonergan

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You alluded earlier to Scott Sumner and some alternative proposals that are really all about making the current policies more extreme: more negative interest rates, more asset purchases, bigger changes in inflation expectations. There is a very legitimate case that the current policy tools are already reliant on asset price distortions. The transmission mechanism is a kind of financial instability. You drive asset prices to extremes because that's the only way to have a marginal impact on demand. What we're saying is that you could put interest rates closer to normal levels, but make cash transfers directly to stimulate demand. The financial stability point is one in favor of this set of policies.

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Originally posted by second:

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Originally posted by 6ixStringJack:


Also Vox,

To fix the economy, let's print money and mail it to everyone

https://www.vox.com/2014/9/9/6122517/helicopter-drop-money-print-fed-b
lyth-lonergan

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Do you realize this is a what-if discussion?

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A what if question from 2014. We have our answer now.

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You alluded earlier to Scott Sumner and some alternative proposals that are really all about making the current policies more extreme: more negative interest rates, more asset purchases, bigger changes in inflation expectations. There is a very legitimate case that the current policy tools are already reliant on asset price distortions. The transmission mechanism is a kind of financial instability. You drive asset prices to extremes because that's the only way to have a marginal impact on demand. What we're saying is that you could put interest rates closer to normal levels, but make cash transfers directly to stimulate demand. The financial stability point is one in favor of this set of policies.

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Here is another what-if: What if all Trumptards are converted into fertilizer? Will that help or hurt the economy? We already know that fewer Trumptards means IQs will increase, but will that be good for productivity? Will the percentage of adults in gainful employment increase? Will real estate prices decrease? What happens to interest rates?

The Joss Whedon script for Serenity, where Wash lives, is Serenity-190pages.pdf at https://www.mediafire.com/two

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