It's The Stupid Economy - Part 1 - Failing to Identify the Problem

The number one reason cited in exit polls for Harris losing was "The Economy" or some variation of that. The price of eggs and stuff. And this is confusing because by almost any quantifiable measure, Biden has done an exceptionally great job at managing the economy. So here, I am going to put my thoughts about it together. There's a lot of thoughts, so it's probably going to span a couple posts

First - yes, Bidenomics has been great. He took over in the middle of a global pandemic which ravaged the entire world order - and shepherded the US economy back to normal faster than any other country in the world, despite the US being hit so hard by COVID. And the benefits have not been concentrated at the top as they usually are. It is the lowest income segments that saw the highest percentage income growth under Biden. The US is at full employment with inflation still in the target 2% - 3% range. That's the theoretical ideal pocket! Stock markets indices are at record highs and the poverty rate is at record lows.

One thing that's obfuscating is that since Biden took over during the COVID crisis - it's easy to demonstrate massive improvement by comparing the start of his term to the end of it. But even if you mute this impact by only looking at the latter half of his presidency, his performance is still incredible in terms of economic growth, job creation, and slowing the growth of inequality. 

The US has outperformed the rest of the world on these terms under Biden's watch. He managed the crisis better than anyone else. So it's like he went to the Olympics for Economic Performance and won gold while setting a bunch of new world records - and the reception he's gotten back home is having garbage thrown at him and getting called a big loser. So let's try to unpack why.

The one thing people point at is inflation. Prices are so much higher now than they were before Biden took office! And this is true - the economic shock that was a global pandemic had major impacts on inflation around the world. Also, there was a big to do about "supply chains". The global logistics and distribution network has been highly optimized, it's been pared down to deliver exactly what is needed and almost nothing more - so as to get the prices down as far as possible. But then the pandemic changed how everyone was doing things. They weren't going into the office anymore, but instead huddling alone in self-isolation. Irrational hoarding behaviour proliferated with people stockpiling toilet paper like it was going to be the new currency in the apocalypse. If your delivery system is designed to supply the factories which pump out fast food entrees for shipping to chain restaurants and suddenly half that demand changes to supermarket food, it will take time and money to adjust.

Russia invading Ukraine didn't help - Russia is a major energy supplier to the world, so this disruption was bound to impact energy prices.

IOW, inflation was caused by outside factors - the shock that was the pandemic and a major energy supplier being hit with a wide slate of economic sanctions. And this was pretty obvious at the time - and also obviously, something which the system would adjust to. The nature of demand had suddenly changed - over a very short time, people needed less office appropriate clothing and more pants with elasticized waists. This calls for a retooling of production and supply, which is expensive - but also something that can be completed. Those costs get paid and then we're back to normal. It's my understanding that this was the argument behind Team Transitory - people saying that the high levels of inflation were temporary and would go away. And that's exactly what it was - a temporary bump in inflation before coming back down to normal levels.

And again - the US outperformed most of the world on this measure too. Yes, there was a lot of inflation, but Biden got it under control, while maintaining low levels of unemployment, faster than anyone else. And more importantly than that - he managed it with wage growth outpacing inflation on the aggregate. Now this did take time - inflation was on top for a while - but that's been reversed now and overall, people have more purchasing power now than they did before the pandemic.

So what gives? Why do Americans still feel like "The Economy" sucks?

I have ideas. They're confused and jumbled right now. And maybe they are dumb and totally wrong - but they are stuck in my head and I need to get them out. But this post is already too long, and I still need to organize them some more, so mark this as "...to be continued" - hopefully not after another decade long hiatus.