Cui Bono - part the first

Well, at long last the Newspaper of Record, aka NYT, has fessed up that macro is tough to do. And twice on the same (dead trees version) day. One says that macroeconomics blew it, while the second says that inflation is down again.

They're both interesting reads, so I commend them to you.

Macro is tough to do for two related reasons: 1) almost no macro data is census, but samples and 2) it's in the interest of Big Players to spin what data is available to suit their agenda. We saw that sort of shit from Gov. DeMented during Covid. If you ever believed that the experience in FL was as asserted by Gov. DeMented and his henchmen, there's a really historic bridge from Brooklyn ripe for sale. And, of course, there's the case of Orange Jesus and his $10 billion net worth.

The first report does, more or less, get to the heart of the matter: economists, as most data wonks, predict from past data and experience, even when the events driving current experience have no precedent in the available historical data. Covid disruption, to put it nicely, is most closely modeled on the Spanish Flu pandemic (and, no, it didn't come from Spain). Any data from more than a century ago, even if the macro folks looked at it, would be structurally irrelevant to today.

So, why did the macro wonks claim that the Sky was sure to Fall any day now? Because they ignored the structural reality staring them in the face. The Fed had plenty of data showing that, coming out of the height of Covid, that two facts were unambiguous: households had hoarded a few trillion Bongo Bucks because so much supply had shrunk. While approaching normalcy post-Covid, it was believed that supply would ramp up. Didn't happen, in large part because so much supply is centered in China, and Xi is a xenophobic imbecile who demanded his Zero Covid, no foreign vaccine nonsense. Cui bono, anyone?

The net result has been it's taken somewhat longer to burn off that hoard of cash. Now that the tank is nearing empty, and supply is returning to pre-Covid levels... well, wattayano, supply and demand are kissing each other on the lips.

Will the Soft Landing stay on course until Election Day? Orange Jesus has said he wants, among other evil events, a great recession for Sleepy Joe at least as bad as the one that got Dubya tossed from the White House. No, he didn't explicitly mention Dubya. Likely his brain no longer remembers back that far. Correct me if I'm wrong, but he's behaving more and more like Alzheimer's Ronnie in his last days as Prez. Saints preserve us.