morning in america this ain't

assessing krugman claims about bidenomics

team apologia has really been out lately making the case that “americans are wrong and the economy is great! trust the experts!”

leaving aside the absurdity of “an economy so good you need the government to tell you that you are thriving!” who whole thing is sort of charmingly soviet.

there are many happy water carriers, but to my mind, pretty much none stand worse than the bearded baron of baldfaced balderdash himself, paul krugamn.

this is because once upon a time, paul was an actual economist and it just makes this descent into populist partisan pandering all the worse because he absolutely knows better and is clearly doing this on purpose and is selling us out for 30 pieces of fiat currency.

(he also turns off responses on twitter, a sure sign of “don’t want anyone checking my work”)

and it’s been a little while since we did a stats with cats. so let’s look:

here is señor paul with his grand claims:

bidenomics are just like reganomics! so stop being angry about the economy and start realizing how great things really are!

this tweet has so many embedded fallacies it’s a challenge to know where to start, so let’s just start here:

the manner in which CPI was measured in the US was changed several times in the late 80’s and early 1990’s. we can argue about whether these changes were good, bad, or indifferent and/or constituted needed adjustment or deliberate manipulation to make CPI read lower and reduce COLA cost increases in social security and medicare and perhaps reasonable people could differ in their views, but we need not solve that here because there is a simple fact about which pretty much everyone agrees:

for any given set of facts, the current CPI metric will read significantly lower on an annualized basis and this data was never normalized.

they simply changed the methodology and then spliced it so the US CPI series is not really comparable from the 80’s, especially the early 80’s to now.

estimates vary (and personally i suspect williams runs high and the actual variance is closer to 2 percentage points) but the direction of the change is not in doubt.

but again, for this discussion, it does not matter if it is more or less accurate, just that the old and new data are not really comparable. the whole point was to make it read lower. this was the fundamental argument of the boskin commission.

so right there, paul’s analysis is garbage. it’s apples and oranges and utterly skewed to favor biden.

but this is FAR from the worst part of this analysis.

he also uses a false framing about “righteous anger because the level of prices is up.” but this is not the case because that’s not really what people feel. what people feel is the change in their buying power. and THAT has been a calamity.

to show this, i used the FRED data from the st louis fed, generally the gold standard repository of official US data.

as a metric, i chose “real DPI” which is to say, inflation adjusted disposable personal income (income after taxes and transfers including welfare and social security etc) as this is the metric that people “feel.” this is your buying power, what it feels like to take your income stream to the store and to use to to pay rent or mortgages.

note that because this data uses different inflation metrics, it would also likely favor biden. but obviously, if it does, that slant was swamped by the prevailing trend.

it’s instantly clear that these two economies have nothing in common.

the data goes through march 2024, so i compared the first 39 months of the biden presidency to the first 39 of the reagan presidency by setting the first month of each to 100 and then measuring change.

they are not even directionally aligned. despite the harrowing and sharp volcker recession, caused on purpose early in his presidency to break the back of the carter inflation, the reagan era managed

• +12.45% growth in real DPI in 39 months and

• at the 39th month had a growth rate of 6.7% vs a year ago.

that’s a ripping rate of growth.

compare this to biden where

• real DPI contracted 6.33% in 39 months and where

• at the 39th month, year on year growth was an anemic 1.4%.

claiming these economies are anything like one another seems pretty inapt, but it actually gets significantly worse because we have not accounted for population growth. real DPI is a whole economy measure. to really see what people feel, you want to see it per capita. so i pulled that from FRED as well.

it looks like this:

reganomics:

• +9.22% growth in per capita real DPI over 39 months

• +5.80% growth in the 39th month vs year ago

brandonomics:

• -7.56% growth in per capita real DPI over 39 months

• +0.85% growth in the 39th month vs year ago

these are disastrous numbers and do not even show a path to getting back to flat in 4 more years.

it’s pure malaise and no amount of spin meistering is going to make people feel otherwise. the truth of the economy cannot be hidden in ham handed manipulation of statistics and telling people they are wrong.

honestly, this seems likely to backfire both by further eroding trust in the state and its “experts” and by making people think that “everyone is getting ahead but them” as they feel their own loss of buying power but keep hearing about how good things are supposed to be.

you cannot prevaricate your way to popular perception of prosperity.

***addendum because people are asking:

trump first 39 months:

• +10.25% rDPI, +3.9% growth rate vs year ago at 39th month

• +8.09% per capita rDPI, +3.4% growth rate vs year ago at 39th month

so, not quite reagan numbers, especially given what reagan had to start with, but good numbers, certainly better ones than biden.

people saw what was going on then and they see what’s going on now.

and that is why the 80’s were “morning in america” and today is “bedtime for brandon.”