We have a regular reader named Joel (no last name) who worked for years in a union job in New York. I think he is/was an electrician, but I’m not certain. Nor do I know if he is retired. I do know that he reads economic data with care and knows how to put economic trends into perspective.

Joel wrote in response to a post about the success of Bidenomics, which referred to voters’ concerns about inflation:

The qualifier about inflation is over the top.
According to the Department of Labor Real Median Income is higher than in 2019. The thing about that is that it does not matter what year you pick . It is calculated in 1984 dollars. Simply how much can you purchase with your income today compared to 1984 or in any given year after 1984. So at least 50% can purchase more than they could in 2019 when nobody complained about inflation. Then there is the question of who that 50% is ? Most of the wage gains in the past few years have gone to the bottom 2/5ths of the wage ladder. So presumably those hurt worst by inflation were higher income wage earners who after paying more for eggs and steak still managed to book a trip to Europe or a Disney Cruise in record numbers.

Then there are the poor millennials who can not afford to buy a house! The problem there again home ownership among younger Americans is higher today than it was in 2019. I will help agent 77 a bit with this. The Pandemic and working from home drove a whole bunch of wealthier millennials out of rental apartments in major cities to houses in the burbs making the primary assets of many Boomers a lot higher.

It is well accepted by most economists that “Animal Spirits ” (thank you John Maynard Keynes) drive markets one way or the other. What many economists are not willing to admit is the role of Media in driving those “Animal Spirits .”

Long before Putin invaded Ukraine in 2014 and again in 2022, the media started hyping inflation like it was the late 1970s. Gas in September of 2021 was historically cheap at $3.21 a gallon. It was way higher in 2007-8 and it was was between $3.60 and $3.90 a gallon for 4 whole years from 2011 till 2015. Between increased income and millage the average worker was working far less hours to fill a tank. As Neil Irwin at the NYTimes pointed out. and Yet the Media including the NYTimes managed to find a station a 100 miles off the coast of California (sarcasm)that had gas at $5.99 a gallon. Portraying families as having to choose between baby milk and gas.

Those including Yellen and Krugman who called the spike in prices transitory and due to supply chain issues were absolutely correct. This was not a wage price spiral. Their problem was like most “liberals” they lacked the strength of their convictions and apologized as those supply chains actually started easing.

Meantime bad news sells. Nobody had to convince Republicans (47% of voters) that the Economy was terrible they blamed Biden for the Bad Economy the day he won the Democratic Nomination. However normal Americans whose brains were not yet eaten out by the MAGA virus were convinced that inflation was out of control. Convinced that it was 1981 all over again and this before Putin invaded Ukraine. Which also was also a short lived spike. With inflation starting to ease by June of 2022.

Corporate America took note. If the people expected inflated prices they were going to give it to them. As they laughed all the way to the bank with record profits.

In a complete reversal:

” Strikingly, over half of this increase (53.9%) can be attributed to fatter profit margins, with labor costs contributing less than 8% of this increase. This is not normal. From 1979 to 2019, profits only contributed about 11% to price growth and labor costs over 60%,” EPI.

And now we are told by the Media that Americans are disappointed that prices have not come down. As a reminder for those with short memories.

Or the few here not over 60. Most prices do not come down short of a Depression.

In Sept 1984 when Reagan’s ad declared “Morning in America” :

UNEMPLOYMENT: was 7.3% not 3.7% a pathetic improvement of 0.2% from when he took office in 1981.

INFLATION: was 4.3% not 3.4% as it is today.

The FEDERAL FUNDS Rate was (for those thinking interest rates are high) was 11.30% not 5.33%. Again for those with no memory outside of a few recent recessions a rate not high at all.

If 1984 was morning in America it was a cloudy one at best. Biden has brought a bright sunny day. With some of the most pro worker / working class policies since FDR.