More Thoughts on America's Feel-Bad Boom

[Nevilledog]

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Harry Litman
@harrylitman
.⁦@paulkrugman⁩ ‘s analysis of why people think the economy is worse than it is: 1) inflation aversion is stronger than classical economics predicts; and 2) impact of right wing crazy attack-dog practices

via @NYTOpinion

nytimes.com
Opinion | More Thoughts on America’s Feel-Bad Boom
Inflation aversion meets the partisan economy.
8:57 AM · Feb 7, 2022

https://www.nytimes.com/2022/02/03/opinion/inflation-consumer-confidence.html

No paywall
https://archive.fo/wtz81

*snip*

These days partisanship shapes almost everything in America. For example, you can’t talk sensibly about lagging rates of Covid vaccination without acknowledging that Republicans are four times as likely as Democrats to be unvaccinated. And the partisan gap in perceptions of the economy has exploded in recent years.

Let’s not bothsides this. Yes, Democrats may have been reluctant to acknowledge good economic news under Donald Trump. But right-wing negativity right now is absurd, with Republicans assessing the current economy as worse than the economy in June 1980, when unemployment was almost twice as high and the inflation rate was 14 percent. My back-of-the-envelope calculations suggest that this craziness might explain a large part of the shortfall in consumer sentiment.

But where’s the craziness coming from? Even mainstream media have accentuated the negative; one liberal think tank analysis found that CNN and MSNBC devoted 50 percent more screen time in November to inflation than to all other economic developments combined.

But Fox News has devoted almost three times as much screen time to inflation as CNN over the last two years, while among other things illustrating its reports with photos of empty shelves taken in other countries and other years. No wonder the G.O.P. base says that the economy is in terrible shape.

*snip*

[Klaralven]

1. It's too much like the '70s

We had emptied our wallet with "guns and butter" spending during the Vietnam war. We had Nixon's price control attempts and Ford's Whip Inflation Now. Another major cause of inflation was the '73 oil embargo and oil crisis followed by the '79 oil crisis.

We have again emptied our wallet in the Middle East and Afghanistan. Debt is extraordinarily high, and if interest rates go up, servicing the debt will take a larger and large part of the tax revenues. We import a majority of our manufactured goods, and costs in other countries are going up. Energy prices are slated to climb sharply as green policies curtail investment in the hydrocarbon energy sector before renewable have been built and as geopolitical disruptions of the energy supply loom.

A year ago, consumer spending and jobs had been propped up by massive spending. Plus, people could still rationalize that the problems were temporary and would go away when Covid subsided.

Now there is little reason to be optimistic about the economy.