Business Cycle Indicators for End-July 2021

Consumption, personal income and St. Louis Fed’s real manufacturing and trade industry sales were released today. The July employment situation will be released next Friday. This is the picture today.

Figure 1: Nonfarm payroll employment from June release (dark blue), Bloomberg consensus as of 7/30 for July nonfarm payroll employment (light blue +), industrial production (red), personal income excluding transfers in Ch.2012$ (green), manufacturing and trade sales in Ch.2012$ (black), consumption in Ch.2012$ (light blue), and monthly GDP in Ch.2012$ (pink), all log normalized to 2020M02=0. NBER defined recession dates shaded gray. Source: BLS, Federal Reserve, BEA, via FRED, IHS Markit (nee Macroeconomic Advisers) (7/1/2021 release), NBER, and author’s calculations.

Personal income excluding current transfers growth has stalled out. Relative to the NBER peak in 2020M02, employment continues to be the laggard, down 4.5% (log terms). If nonfarm payroll (NFP) in July rises as forecasted by Bloomberg consensus by 900K, it’ll still be down by 3.9%.

Manufacturing and trade industry sales declined as suggested by retail sales ex-food services (as noted in this post from mid-July).

Figure 2: Retail sales excluding food services, in 1982-84$ (teal), manufacturing and trade sales in bn. 2012$ SAAR (black), both in logs, 2020M02=0. Retail sales ex-food deflated using CPI-all. NBER defined recession dates shaded gray. Source: Census via FRED, BLS, St. Louis Fed via FRED, NBER, and author’s calculations.

Continued, albeit slower, decline in June is implied (a regression of growth in manufacturing trade sales on growth in retail sales 2019-2021 yields an adjusted-R2 of about 0.84).

Retail sales provided little information on the June change in consumption, as shown below.

Figure 3: Retail sales and food services, in 1982-84$ (teal), consumption, in2012$ SAAR (light blue), both in logs 2020M02=0. Retail sales using CPI-all. NBER defined recession dates shaded gray. Source: Census via FRED, BEA, BLS, St. Louis Fed via FRED, NBER, and author’s calculations.

The personal income and outlays release also provided information regarding inflation.

Figure 4: Personal consumption expenditure (PCE) inflation (blue), PCE core inflation (orange), PCE trimmed mean (green), CPI-all inflation (red), all month-on-month annualized. Source: BEA, Dallas Fed, BLS via FRED and author’s calculations.

PCE inflation of 6.3% was considerably less than CPI inflation of 11.4% — and less than Chained CPI inflation of 10.9%. That June reading was also less than April’s reading of 7.2%; unfortunately, the trimmed mean inflation rose from 4.8% to 5.7% — so inflationary pressures do exist.

The level of the PCE price index has risen and exceeded the trend defined by 2% from January 2020.

Figure 5: Personal Consumption Expenditure (PCE) price deflator (black), Cleveland Fed nowcast (gray line), WSJ survey mean (teal line), 2015M01-20M01 trend (light blue), 2% trend from 2020M01 (pink), all 2012=100, on log scale. Source: BEA release of 7/30/2021, Cleveland Fed (accessed 7/29), WSJ July survey, and author’s calculations.

It might not be obvious in the graph, but the 1.1% gap between June actual and trend is the same in absolute value as the -1.1% gap in April and May of 2020.

53 thoughts on “Business Cycle Indicators for End-July 2021

  1. Moses Herzog

    Was pulling for Phoebe Bacon tonight, maybe she has other events she can still get her medal?? It’d be nice to see.

    Interesting economic numbers. Going to take me some time to digest these. Average gasoline prices in my area seem to have stabilized at $2.77, but I think I can do better than that looking around. Cooked a small piece of lamb over the burner and half a can of green beans. Not as bad as it sounds. I’m not paying $7.50+ for fast food and the service at some of these places lately. WOW. Must have had a job fair at the federal prison. I swear to G*d man I try to treat service workers nice, but they are stretching me. Nope, grabbing for those meat pieces in the freezer.

    I can get 6 dinner rolls at a fast food place for $3.14. Not as good as at the supermarket but that doesn’t seem horrid right?? Seems to beat fries. Grandy’s will still give you a legit meal for $3.99. Outside of that I’m not messing with it ’til they rollback these prices.

  2. Moses Herzog

    Would anyone like to know how truly horrid Republicans are in the state of Oklahoma?? May I present you with the following:

    As of 8:30pm Pacific time Friday night, the incredibly offensive post had not been takin down from The Oklahoma Republican Party’s Official Facebook page. WARNING: the following link may contain images and statements extremely offensive to some readers. I am attempting to show this comment to readers, so they can be aware of the true horrors of the Republican Party and their love of MAGA propaganda:

    1. Moses Herzog

      This is the image, just within the last few minutes it appears to have been taken down—FINALLY, after hours of people calling Oklahoma’s State Republican Party officials, near 23:00 evening Friday. Again, a WARNING before clicking on the link, some readers may find these highly highly offensive, emotionally upsetting, or as the young people say “triggered by”:

      1. Moses Herzog

        Speaking for myself in terms of Oklahoma Republican Party Chairman John Bennett’s response, file this one under “Not Surprised AT ALL”:

        He’s wagering that since the number of Jews residing in Oklahoma is quite small he can slide this one under the radar. I give it 67% probability Bennett (wrongly and shamefully) survives this as Oklahoma Republican Party Chairman, with a 33% chance of being axed, which will only be caused by national (out-of-state) pressure.

    1. Gregory Bott

      Nothing personally, but the eviction ban was dumb in the first place. Not only is its end supported, but created a mess downstream for the rental market. Your losing in the court of public opinion.

      1. Moses Herzog

        Did you mean “nothing personal”? Did you mean “you’re”?? Go back to MAGA grammar school.

        If you taught “your son” to grammar like this, it’s no wonder he turned to drugs. But at this point, I’m questioning the validity of the story about “your son” as well. You insult the labor market out of the left side of your mouth, then out of the right side of your mouth tell us that same labor market “offered your son work when he never could keep a job”. It sounds like a made up/manufactured story to give validity to your argument, while inoculating your version of on the ground reality by couching it in terms of your “son”. I’m sure some idiot like “baffling” will tell me I’m horrible for saying this, but it smells. I can smell bullcrap from 200 miles away buddy, and the story of “your son” has an odor to it.

        1. Gregory Bott

          Your not speaking grammar, your talking in tongues mad, I won’t support your views. At least educate yourself.

          1. Moses Herzog

            From Glenn Thrush, Matthew Goldstein, and Conor Dougherty of NYT
            But there was little chance that Republicans on Capitol Hill would agree, and by the time White House officials asked, only two days remained before the freeze expired, angering Democratic leaders who said they had no time to build support for the move.

            “Really, we only learned about this yesterday,” said Speaker Nancy Pelosi, who had publicly and privately urged senior Biden administration officials to deal with the problem themselves.

            “What a devastating failure to act in a moment of crisis,” said Diane Yentel, the president of the National Low Income Housing Coalition, which had pressed for an extension of the moratorium. “As the Delta variant surges and our understanding of its dangers grow, the White House punts to Congress in the final 48 hours and the House leaves for summer break.”

            How do people like donald trump get their foot inside the door of politics and/or the White House?? Because~~~believe it or not~~~ people look around and ask themselves “Where is the effective government??” “What has the government done to help me when I was on the skids??”. Pelosi looks into that TV camera (possibly with premium ice cream in camera shot) and says “Oh!!! These monsters in QAnon!!! These monsters in MAGA!!! I am so upset!!!!”

            Who does Nancy Pelosi think creates and ferments the soil for guys like donald trump and Marjorie Taylor Greene to grow up and out of?? It sure is a “grand mystery” isn’t it??

          2. Moses Herzog

            From the same Glenn Thrush co-authored NYT article:
            “As a result, the $47 billion Emergency Rental Assistance program, to date, disbursed only $3 billion — about 7 percent of what was supposed to be a crisis-averting infusion of cash. “

            No biggie. It’s obviously a much more efficient use of human capital to throw people and their belongings out into the street. And Nancy has her ice cream to get to after all.

          3. Barkley Rosser


            Ah, you have the shocking fact here, this failure to disburse hardly any of the money. Now somehow you idiotically think this has to do with Pelosi. Just how stupid have you become when you get off on your sick vendetta against Pelosi?

            She played a major role in legislating that there would be that $47 billion to hand out. She played zero role in the actual handing of it out, done by a bunch of people in the executive branch as well as officials at the state and local levels.

            Now you yourself here note that she has been complaining about how this has been handled for some time. But these officials in the executive branch, like Susan Rice, have done nothing to respond to her efforts to get them to fix this. But somehow you think she is the person responsible for the failure to hand most of this money out, and even have the insane nerve to somehow tie this to her ice cream earing habits, a particular matter you are totally obsessed with. Just how sick are you, Moses? I mean really. This really is as bad as those GOPs blaming her for Jan. 6. It really is. You are no better than those pieces of garbage.

    2. Barkley Rosser


      I could not get sound on the link you provided, but checked elsewhere on AOC’s views on this. It looks like she and a lot of other Dems, including Pelosi, whom you once again show your weird and sick obsession with, are blaming people in the Biden administration for only putting something out the day before the planned adjournment, not enough time to put something together before the ban on evictions ended. There is division among the Dems in the House on how to proceed, which you can blame on Pelosi if you want, although those divisions look to be real and not easily overcome.

      Ah, but perhaps you also agree with the GOPs who are blaming her for the Jan. 6 insurrection. I mean, a woman who likes fancy ice cream is capable of almost any awfulness, right?

      1. Moses Herzog

        The interface may be slightly unfriendly, in the lower right of the video screen (after the link jump obviously) there should be a very small white graphic that looks like a tiny speaker or a “bell horn” type shape (glide your cursor over the very bottom of the video or the lower right if it’s not there at first glance). Click on that and you should have sound. It’s not MLK’s “I Have A Dream” speech but she makes some very good points in it. But the main thing is she’s “showing up”, She’s not just going on holiday after failing to get the job done. It’s absentee leadership (Pelosi’s personal specialty).

      2. Moses Herzog

        What is “weird and sick” is you and pgl’s “obsession” with tribalism. You think because Kevin McCarthy attacks her for invalid reasons, then that means no one should attack Pelosi for lazy and poor leadership. I’m afraid to inform you and Sorry Sack in Brooklyn, my mind doesn’t work that way. If someone is shit, someone is shit. You can take the “the enemy of my enemy is my friend” tact if you like, but that didn’t work out well for pgl on his unquestioning adoration of office staff molester Andrew Cuomo, so, like, you might want to engage your brain cells a little more, whichever ones are still moving up there.

        It’s not like I expected you to care about evictions anyway Barkley. You’re the type that would brag for the next month about putting $5 into a hopper at a homeless benefit dinner, and then make snide remarks about some guy walking on the sidewalk on his way to a soup kitchen. So it’s not like I expected you to be “on board” here anyway Junior.

        1. pgl

          Weird – I have not defended anyone on the prospect of these unnecessary evictions. But I guess in your wine driven rages, I am to blame for everything including the idiots in Florida who have ignored this delta strain of the virus.

          I guess if it ends up that Team USA does not get the gold in basketball you will blame for that too. Even though you suck as a basketball analysis.

        2. Barkley Rosser


          How about you deal with reality here. This is a messed up situation, but it looks like the people who have messed it up are people in the Biden administration, I am not sure precisely who, not Pelosi. You are obsessed with going after her and have done so again. I ask,: did AOC criticize Pelosi or did she like Pelosi criticize the Biden administration?

          There is a difficult issue here. I am not keen on people being evicted, but somehow at some point there needs to be some sort of return to a more normally functioning rental market, which is on a major rampage of rising rents, so there is a very serious problem here that does not have an obvious or easy solution. I am not at all happy that this situation has gotten to where it is now, but I can also see why the Biden people have not gotten their act together on it either. This is very unfortunate.

          But your somehow deciding it is Pelosi’s fauilt is shameful and unacceptable. You really are just totally wacko about her, and have blazingly shown it yet again.

          1. Moses Herzog

            Professor Rosser
            I’m going to attempt to be nice/tolerant with you here, which is apt to make me upchuck my very good (and cheap) Heineken at any moment–which might ruin my otherwise very sauced and happy night. Did you happen to notice what famous architectural structure was in the background of the AOC video I posted??? (and Menzie kindly allowed) HINT to internet challenged in Virginia and slow-heads of Brooklyn. It was not the White House in the background of AOC’s video. Review the AOC video for content and video background.

            You think Pelosi “doing her job” is saying : “We only found out about this yesterday” (interesting, the Speaker claiming she only knew yesterday, about a topic discussed over a month ago. i.e. discussed for weeks). And you think Pelosi “doing her job” is saying “I’m leaving town, YOU (Biden) go make an executive order” that has no legal ground to stand on and which executive order will FAIL.

            WOW, like, I now I’m buzzed right now, but just HOW DUMB are you and Sad Sack in Brooklyn?? Do you two read anything?? You don’t do those type things by “Executive order” [ Uncle Moses, choosing to skip vulgar nouns (in the name if civility) for Barkley and pgl here ]

          2. Barkley Rosser


            Well, this “buzzed” pile is barely worth responding to, but in fact Pelosi has been going on about the executive needing to do something about this situation repeatedly over a long period of time. What she learned “yesterday” was that somehow the executive wanted the Congress to do something in two days, and that was not because she was not paying attention. It was because the executive only got around to saying that two days before the date of expiration of the moratorium. I note AOC agreed with Pelosi that the executive was behaving poorly on this. Your original post on this was already way off on that point, as I noted earlier, you somehow trying to recruit AOC into your sick anti-Pelosi vendetta.

        3. Barkley Rosser


          Go look at that screed you posted further above after Bott’s comments. In it in bold it says that Pelosi had been both privately and publicly urging the Biden adminstration to do something. But somehow you find her at fault for what happened.

          No, this is exactly like McCarthy and the rest of the House GOPs blaming her for the breakdown of security on Jan. 6 when she is not even in charge of the Capitol police, exactly the same. You are the one with scrambled brains here, again obsessing sickly over her ice cream behavior.

          Why are you unable to put the blame where it belongs? That would be on the Biden administration, although I grant it is s bit hard to pin down exactly who there should have picked up the ball on this, which is clearly a major part of the problem. Pelosi has been bugging them about doing something, but obseesed you, guy who comments elsewhere on where are those silent women here, goes after her. Sick sick sick.

          1. pgl

            It is an Administration short coming but we are now into August so we need some breathing space from Congress so the Executive Branch can get its act together.

            There was this Obama housing expert named Shane Donovan who ran for NYC mayor (trust me I heard his name repeated so many times I’m still having dreams over his annoying ads). He lost so he needs a new job. I’m sure he’d be glad to help Biden out.

          2. Moses Herzog

            Pelosi is “urging them to do something” she says “We only found out about yesterday”. My dearest Junior….. HOW do you urge someone to do something you only found out yesterday?!!?!?!?!? That sounds like a Barkley Junior style “lies only a 5-year old would tell” doozy. That’s the type “leadership” that could only be found at the “journal” you edit Barkley. Pelosi says: “I’m House Speaker only in title, not work ethic, YOU go do it with a LEGALLY WEAK executive order”. [edited MDC]

          3. Menzie Chinn Post author

            Moses Herzog: Suppose House had passed eviction moratorium extension; would Senate have 60 votes to pass similar legislation? Should the Administration have tried using Executive Order to extend the moratorium in direct contradiction to Supreme Court’s decision regarding the lack of CDC authority to impose such moratoria?

            These seem to me reasonable questions to ask when jumping on House failure to move on the moratorium extension.

          4. Moses Herzog

            @ Menzie
            Those are reasonable questions, I will attempt to answer them. Remember i’m slightly sauced, but still pretty good, I’m still in “yellow” light, not “red” light “dark side” yet.

            Your first question: “what if Pelosi passes the bill, doesn’t get needed 60 Senate votes??” Let’s assume, she didn’t have the votes. Would it have been “so bad” to “force” the situation, and get Senators’ votes “on record”?? Assumably the Senators’ votes would have been on record. Don’t voters (of both parties) have a right to know where Senators’ stand, without putting bills in limbo or “not on the floor”?? (subtext: Uncle Moses would have respected Pelosi had she “forced” a Senate vote, might have even given her 2 cents credit in these blog threads)

            Your 2nd question: Should the Administration have tried using Executive Order to extend the moratorium?? Do I strike you as a Kavanaugh fan?? I’ll give the bast*rd this much~~Kavanaugh [ Uncle Moses spits after saying his name ] gave them a “heads up” that it was absolutely doomed for failure. The “executive order” wasn’t going to fly~~Biden knew it, Pelosi knew it.

            Now, on your 2nd question, you can argue Biden should have tried, a “part of me” wouldn’t have minded seeing it. The problem is, how many “executive orders” can you make, which end up failing before ALL of your “executive orders” come out optically weak??

            Was Biden “enthused” about a moratoriam extension?? For me, looking, gray area, but, as gray as that is, I would say Biden was more “enthused” than Pelosi.

          5. Moses Herzog

            I should clarify, I obviously know Pelosi is House, I’m assuming it puts some pressure on the Senate to vote before “vacation” if she gets it through the House. Again, the effort would have counted for something. A lot of tenants/etc being thrown out of their homes, become (in the future) or are already MAGA voters. I don’t know what is so hard to understand about people transitioning away from a party, or that party’s “leaders” (Pelosi) who do NOTHING for them.

        4. Barkley Rosser


          So I have done some further checking on this unfortunate eviction situation, which does look like it is going to end up with a bunch of people dumped on the street. Not good at all. It is not a simple matter.

          The most shocking matter is that when this was set up last June during the Trump administration, with support from Congress (ooooh! There is Pelosi clearly to blame!!), and with somehow the CDC of all bodies the lead federal agency on this (arguably unconstitutional), a sizable $47 billion was passed to be handed out to renters to help them. Apparently the amount of that handed out up to now is only $3 billion. Clearly if all of it had been handed out a whole lot fewer people now would be facing eviction than are (this ban on evictions has to end some time).

          Why has so little been handed out (oh, clearly Pelosi’s fault again!!!)? Apparently it was made to be complicated with both state and local governments involved, so the situation varies across the country. But one thing I have read is that to get this aid renters pretty much everywhere had (and still have) to fill out humongous amounts of annoying and confusing paperwork. I do not know who is responsible for that fiasco, but I am sure it is largely people in the executive branch and from the time of the Trump administration, although somehow the Biden people did not get this fized. But whatever the ultimate reason, somehow the vast majority of the money Congress (Pelosi!!!) legislated to support renters did not get to them.

          And apparently Pelosi has been aware of this situation for some time, and you, Moses, even reported it here how she has been calling out for some time for somebody in the administration to do something about it, but nobody has. And if you want to pick on a woman over all this, let me give you a more serious candidate for blame than that nasty fancy ice cream eater Pelosi, a fave of yours I have met and also respect, Susan Rice, who is a major player in the White House on domestic policy. She is somebody who certainly should have been on top of this and could have done more than Nancy Pelosi to get this fixed. Pelosi provided the money, but the executive branch failed to hand it out.

          Oh, and apparently the Biden administration did want to extend the ban on evictions for another month, already extended once, but apparently the SCOTUS overruled that. But heck, that is probably Pelosi’s fault as well, those SCOTUS judges hanging on her every word.

          I do not know what any of these people are going to do now, but this situation has clearly turned into a bad mess, possibly the worst policy botch of the administration so far, certainly with respect to domestic policy. On this one, JohnH’s whinig about not worrying about poorer people has some real bite, unlike most of the drivel he has been posting on the subject recently. But on one where he could really gnash his teeth accurately, somehow he is silent, although, Moses, maybe you can get him to join you in blaming it all on Nancy Pelosi.

          1. Barkley Rosser

            I guess this part of this thread is about over, but I shall add one more point.

            There is somebody else in all this who deserves a lot of blame for this shameful situation. That is Donald Trump. He is the person who bizarrely and unconstitutionally decided that this moratorium should be handled by the totally overworked and completely inexperienced CDC rather than say HUD or the FHA. That is why SCOTUS said they could not extend the moratorium. That was a horrible botch.

            The problem is that despite all the warnings Pelosi was sending the administration on this matter nobody got on top of this until very late in the game. I think Biden is right that the state and local governments need to step up as it seems they are the ones sitting on all that unspent money that Pelosi and Congress appropriated. But the Biden people should have gotten on this much earlier.

      3. Moses Herzog

        BTW, showing millions of TV viewers you are eating premium ice cream during what was seen at the time as an economic downturn that might rival the Depression, is incredibly dumb from a political standpoint. And if all the reading you and 2slugs have done in your lives didn’t teach either of you that much, it’s not my problem.

        Tell you what, why don’t you go to some rural section of Virginia, and eat at some “hole-in-the-wall” restaurant, but bring 3 of your favorite wines inside with you. Let me know how that one goes for you. I guess if you’re as dumb as Pelosi, and I’m pretty certain you are, when you get some strange treatment after that, you’ll have no idea why.

        1. pgl

          Gee I hate sushi for dinner the other night. I guess you would have me drawn and quartered for that. Now I have not eaten ice cream in years but when I do – it is going to be Ben and Jerrys. Do I need to wear a MAGA hat to do so?

          Come on dude – tell me your excessive wine consumption happens to be Two Buck Chuck!

          1. Moses Herzog

            I know and am well aware, pgl that you are incredibly, in the most profound meaning of the word incredibly, DUMB.
            You are not a politician, so your actions will not be viewed in the same context as a politician, or by the same (cool cliché word coming) optics. Say for example if you were on a late night TV show watched by millions of Americans during a serious economic downturn. Do you need crayon drrawings for this, or……

        2. Barkley Rosser

          Aldo, btw, Pelosi did not go into a hole in the wall restaurant to eat here fancy ice cream. Why do you think that I should go to one with some fancy wines? How messed up are you?

          1. pgl

            Does he drink fancy wines? Charles Shaw aka two buck chuck makes some really good wines. If there is a Trader Joes new you, pick up a case for $24.

          2. Moses Herzog

            I think others got the point/analogy, if they didn’t “get it”and they ask, I will explain it to them. They have to be smarter than you and/or pgl before I will answer that same question. 98% will qualify as smarter than you or pgl, so, that’s an invite.

      4. pgl

        Moses think he is holier than thou because he attacks EVERYONE. Of course a lot of his attacks on things people had nothing to do with. But why should that bother him as he takes great pride in being an equal opportunity insult master. Yea – a lot of his attacks on based on not only lies but pointless lies. He indeed is the modern version of Sarah Palin!

        1. pgl

          Gee I did not know how utterly ballastic old Uncle Moses got over ice cream. Too much fancy wine has rotted his brain!

      5. pgl

        Is it 1992 all over again? Remember how Marilyn Quayle bragged that she baked cookies for her hubby whereas evil old Hillary bought Mrs. Fields cookies. OK Nancy likes really good ice cream so maybe she should be shot.

  3. Moses Herzog

    Keep in mind, when you talk to the Ed Hansons, CoRevs, sammys, Bruce Halls, And Yes, Steven “I Can’t Do Brown People Death Counts”Kopitses of the world, that this is the exact type of brain you are trying to interact with or teach something new:

    Try to remember this cartoon vividly in “your mind’s eye” each and every time you attempt to bequeath these same folks with either knowledge or a different vantage point of the world around them.

    1. pgl

      I bet Arthur Blank has banned this witch with a b from all Home Depots. Blank was a Jewish kid in Queens that learned from his mom how to run a store that caters to all customers. But I’m sure he would still refuse service to a racist ugly dumba$$ like Marjorie Taylor Greene as his loyal customers want nothing to do with this witch with a b.

      BTW tell your BFF JohnH that prices for lumber has come down in Home Depot. He said that would never happen is his latest utterly confused rant.

  4. ltr

    July 30, 2021

    Wonking Out: Keynesian Republicans, supply-side Democrats?
    By Paul Krugman

    So Joe Biden appears to have his bipartisan infrastructure deal. Of course, progressives will be bitterly disappointed if that’s the end of the story. But it probably won’t be. In the end, Democrats will probably pass a second bill through reconciliation, adding several trillion dollars in “soft” investment — especially spending on children, which almost surely will have bigger economic payoffs than repairing roads and bridges, important as that is.

    But today’s newsletter won’t be about legislative maneuvering. Instead, I want to talk about a funny thing that has happened to economic policy debate, detailed in a recent article * by Jim Tankersley. Suddenly, Republicans have become Keynesians, while Democrats are talking about the supply side.

    Traditionally, Democrats sought to justify big spending plans, like the Obama stimulus, by arguing that they were needed to boost demand in a weak economy. This was even true to a limited degree about the arguments made for the American Rescue Plan, the $1.9 trillion package Biden got enacted soon after taking office — although as its name suggests, the plan was pitched largely as disaster relief rather than as Keynesian stimulus.

    Republicans, by contrast, derided Keynesian arguments. In the aftermath of the 2008 financial crisis, they called for cutting spending, not increasing it, buying fully into the doctrine of “expansionary austerity” — the claim that spending cuts would actually increase demand by inspiring confidence (or as I put it, they believed in the confidence fairy).

    When justifying their own plans for tax cuts, Republicans generally didn’t argue that those cuts would increase demand. Instead, they invoked supposed supply-side effects: Reduced taxes, they claimed, would increase incentives to work and invest, expanding the economy’s potential. Democrats generally ridiculed these claims.

    For what it’s worth, the evidence suggests that Democrats were right and Republicans wrong on both counts. The case for expansionary austerity was overwhelmingly refuted by experience, especially in the euro area, while the Keynesian multiplier-type analysis was vindicated. Supply-side economics has yet to offer a single convincing success story; the underwhelming results of the 2017 Trump tax cut are just the latest entry in an unbroken record of failure.

    But a funny thing has happened. Republicans are now warning that Biden’s spending plans will cause the economy to overheat, feeding inflation — which is basically a Keynesian position, although it’s being used to argue against government expenditure. I guess the confidence fairy has left the building. Or maybe G.O.P. economics is situational — Keynesian or not depending on which position can be used to argue against Democratic spending plans.

    Democrats, on the other hand, are arguing that their spending plans, while partly about social justice, will also have positive supply-side effects, raising the economy’s long-run potential.

    What can we say about these claims on each side?

    Concerns that Biden’s long-term spending plans will pump up demand in an economy that we hope will already be more or less at full employment aren’t entirely silly. It is, however, important to bear three things in mind….

    1. ltr

      July 28, 2021

      Inflation Is New Battle Line as Republicans and Biden Spar Over Spending
      Republicans say President Biden’s spending plans will keep inflation rising, but the White House says the proposals could help tame costs.
      By Jim Tankersley

      WASHINGTON — Republicans have made Americans’ concerns over rising prices their primary line of attack on President Biden’s economic agenda, seeking to derail trillions of dollars in spending programs and tax cuts by warning that they will produce rocketing 1970s-style inflation.

      They have seized on the increasing costs of gasoline, used cars, and other goods and services to accuse the president of stoking “Bidenflation,” first with the $1.9 trillion stimulus bill he signed in March and now with a proposed $3.5 trillion economic bill that Democrats have begun to draft in the Senate.

      There are unusually large amounts of uncertainty over the path of inflation in the coming months, given the vagaries around restarting a pandemic-stricken economy. Yet even many economists who worry that high prices will linger longer than analysts initially expected say there is little reason to believe the problem will worsen if Mr. Biden succeeds in his attempts to bolster child care, education, paid leave, low-emission energy and more.

      “There’s been a lot of fear-mongering concerning inflation,” Joseph E. Stiglitz, a liberal economist at Columbia University, said on Tuesday during a conference call to support Mr. Biden’s economic plans. But the president’s spending proposals, he said, “are almost entirely paid for.”

      “If they are passed as proposed,” he added, “there is no conceivable way that they would have any significant effect on inflation.” …

    2. ltr

      July 31, 2021

      Over 1.63 bln doses of COVID-19 vaccines administered in China

      BEIJING — More than 1.63 billion doses of COVID-19 vaccines had been administered in China by Friday, the National Health Commission said Saturday.

      [ Chinese coronavirus vaccine yearly production capacity is now over 5 billion doses. Along with over 1.637 billion doses of Chinese vaccines administered domestically, another 700 million doses have been distributed internationally. A number of countries are now producing Chinese vaccines from delivered raw materials. ]

    3. JohnH

      “Democrats, on the other hand, are arguing that their spending plans, while partly about social justice, will also have positive supply-side effects, raising the economy’s long-run potential.”

      About all you can conclude from the latest numbers is that the most affluent among us must be doing pretty well, since they typically walk away with most income. The same will be true of effects that raise long-run potential. But I wouldn’t expect a guy like Krugman to talk about that.

      1. pgl

        My are you stupid. There are policies that can increase potential output and lead to more equal distribution of income. Mitch McConnell will not pursue these policies and of course an economic illiterate like you would have no clue how to propose them.

      2. pgl

        BTW Krugman talks about this issue all the time. A troll like you hasn’t notice because youcannot read. But I like that graph. Under Trump – the lower quartiles saw no gains but the serial idiot like JohnH kept praising his policies. Go figure!

        1. JohnH

          “Krugman talks about this issue all the time.” But he didn’t. He only noted that Democrats will trumpet its social justice aspects and that they might be expected to introduce a second infrastructure package.

          And he also noted that progressives would be disappointed without concurring with them, explaining why, or even elaborating on how a half trillion dollar package might not do anything more than trickle down a bit to the majority of Americans who live paycheck to paycheck.

          But we’re to assume that Krugman cares about distribution? I guess his sprinkling a few key words into a piece while remaining noncommittal is all it takes to wow liberals…

      3. JohnH

        Krugman focuses mostly on GDP growth, not growth in general welfare, which would include the bottom 60-70% of the income distribution.

        If course, who cares about them? They don’t have much purchasing power.

        1. pgl

          Menzie posted this link:

          Read it you little lying fool. Anyone who starts with Bonfire of the Vanities and then notes it was the 1982 recession that severely hurt the poorest Americans is definitely worth the read.

          Of course he called the anti-inflation hawkery of Volcker a bilateral attempt to increase income inequality. Funny thing is that with all of your stupid ranting and ravings about the FED, you are effectively saying Volcker got it right. Yes – you are so incredibly confused that you have advocate policies that increase income inequality.

  5. Moses Herzog

    If you look at the gold stars on the right-side margin, you can click on the blue text just to the right of those gold stars on the right margin, to fast-forward to specific parts of the police testimony.

    These are the men who donald trump claims were “being kissed and shown love” by protesters. It seems Capitol Police’ recollection of it is different than the “President” who had insighted them to commit murder and beat to death members of Congress. Which is what they would have done had Capitol Police not been there. Not that cowards like Kevin McCarthy, James Lankford, or Ted Cruz would ever recognize that fact. McCarthy, Cruz, and Lankford are totally cool with their colleagues being beaten to death in their own offices.

  6. Paul Mathis

    Industrial Production peaked 3 years ago this month and then fell steadily until March 2020 when it fell off a cliff. Even at its peak 3 years ago, it was barely above its level at the start of the Great Recession in Dec. 2007. Now, it is well below its prior peaks so speculation that the economy is overheating and heading to hyper-inflation seems misplaced.

    The fact is that Pres. Biden’s FY2022 budget significantly reduces spending and deficits in both absolute and percentage of GDP terms compared to the prior two fiscal years. Federal tax receipts are also higher both ways so there is reduced stimulus from taxes as well.

    If the Fed starts tapering and tightening, we may be heading for another recession.

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