Economists see downside risks and recession odds receding in U.S., WSJ survey says https://t.co/HcYfBa0PIy
— Nell Henderson (@NHendersonWSJ) November 12, 2015
And from Kevin Drum:
That got me curious: have real wages risen over the past couple of years? My preferred measure is production and nonsupervisory wages, and it looks like Lacker is right. Compared to CPI, the general trend is upward. It doesn’t look to me like it’s accelerating, but it does seem to be going up.

A decent economy with growing wages is good, all else being equal, to incumbents without regard to party. Another good six months of good economic data will have the Clinton campaign very happy.
Applejinx
Holy flaming shitballs guys. Where can I get a current and regularly updated version of that chart?
It exactly tracks my gross sales as a small business guy selling audio DSP plugins on the internet, internationally. Right down to the two spikes in the beginning of 2013, and the big spike just before 2015.
More relevantly, who do I have to blow to get that chart to spike up more like that? D:
catclub
my comment in another thread:
catclub says:
November 13, 2015 at 11:39 am
piratedan7
@catclub: because bad news leads, good news is moved to the spot between weather and sports…..
mikefromArlington
The Oracle of Omaha sees at least 4 years of growth ahead of that counts for anything
mclaren
A sobering reminder that we are still a year out from the 2016 election, and a lot can happen in that time:
Source: “We Have (Almost) No Idea What The Economy Will Look Like On Election Day,” Nate Silver, 5 November 2015, Fivethirtyeight website.
Source: “The Ten Reasons Why There Will Be Another Systemic Financial Crisis,” Robert Lenzner, 8 December 2014, Forbes magazine.
mclaren
@mikefromArlington:
Over the past 15 years, Warren Buffett’s total alpha has dropped to zero.
Yet another sign that we are now in a ponziconomy that is not operating by normal industrial productive capitalism, but mainly by scams and con jobs. And in the long run, an economy built on scams always implodes. Always.
The two charts in this article are devastating.
Source: “Warren Buffett and Hedge Funds Share a Trait: No Alpha,” Valuewalk website, 15 March 2015.
Matt McIrvin
In 2007 the US real-estate market was already in full collapse. It just hadn’t metastasized to the rest of the global economy.
Matt McIrvin
…So that suggests that if we’re going to see another crash in the next 12 months, we should already be able to see the root cause, if not the connections to everything else. China? The Eurozone? Those come to mind, but it’s hard to tell if the viability of everything is secretly built on them somehow: it wasn’t clear in ’07 that the collapsing US real-estate market was going to have the effect it did.
agorabum
@mclaren: the real estate market had peaked and was already dropping in 2007. I knew architect and engineering firms that had all their business dry up then. There were a lot ore storm clouds on the horizon…
mclaren
Right now America has got at least 3 different financial bubbles: the mortgage-backed rental real estate bubble (giant banks bought up houses in foreclosure, renovated ’em and are now renting them at sky-high prices, paying for it all by issuing collateralized debt instruments based on the fanciful estimated value of these rental homes), the subprime auto loan bubble, and the college loan bubble.
Source: “California housing market cracks in two, top end goes insane,” Wolf Richter, Wolfstreet website, June 2015.
Source: “Moody’s warns about credit crunch, unnerves with parallels to 2008,” Wolf Richter, wolfstreet, 13 November 2015.
Brachiator
So, focusing in on the detail:
This is good, but I don’t know that confidence in the economy is strong, especially when you look at employment numbers.
But the Democrats have a good case to make that they have done well.
p.a.
Oh you poor people. Wages rising slightly above inflation? Is the apocalypse! Time to raise i. The Fed; making the 1% safe since… forever.
Posted over my brand new fios signal! Goodbye DSL, rot in Hell.
catclub
@agorabum: I think housing starts had already peaked, and were on the verge of plummeting. too, also.
The charts of home equity loan and subprime loan amounts outstanding were already scary. They REQUIRED
constantly rising housing prices to be solvent. I don not know of any similar thing that is out of whack in the same way. Households have dramatically reduced their debt ratios. Companies are rolling in cash.
jl
@Applejinx:
You make your own at
h t t p s :// research dot stlouisfed dot org / fred2
for regional and local data:
h t t p :// geofred dot stlouisfed dot org
Thoughtful Today
Erm…
If there are only 6 future months of good economic news that leaves the ~6 months before the election as ? bad economic news?
_Any_ Republican wins in that scenario. Especially against Clinton, who is running as Obama’s (no serious change) third term.
And could someone help decipher Kevin Drum’s graph? Is it showing a ~ 3% increase of real wages over the course of ~ 4 years? ???
jl
Labor market performance is still poor to mediocre by standards of most of post WWII performance. If Fed raises rates this fall, they will be effectively making their 2 percent inflation target a ceiling, not a target. (Edit:which will mean very slow increases in real compensation for vast majority of population and most benefits from growth and productivity going to top one percent).
However, if political scientists are right that voters make their decisions based on changes in welfare during year before election, rather than based on longer term comparisons, then it might be good enough.
The DeLong Baker Krugman Stiglitz axis of Keynesians have far better performance of forecasting based on consistent theoretical framework than any other group of macroeconomists and they say we can do better. They certainly could, and did, forecast what economy would be like a year out from 2008 election. I think if there is a downturn it will be due to unexpected unpredictable external forces (war, for example) or Fed raising rates too quickly.
Richard Mayhew
@Thoughtful Today: the polisci models indicate that people anchor their economic performance perceptions in the 1st q of the year of the Presidential election. October news as long as it is not a Great Depression cliff dive does not drive voted
gene108
@piratedan7:
I think Republicans are right about creating your own reality. I think any movement or political group has to define the terms about which it is discussed.
FDR managed to do this by setting up his own PR machine, within some New Deal programs, such as hiring artists and photographers to document the plight of the poor / the help of the New Deal programs.
I’m not sure how Democrats can do this now.
@catclub:
I think there are a lot of good things that should be reported on that seem to represent a major generational shift in society.
Beyond just the jobs numbers you have the lowest crime rates in the last 50 years. The lowest teen pregnancy rates ever and the highest high school graduation rates.
I just think the reason all this good news does not sink in, even when it is reported, is just that people’s personal situations are not that rosy compared to 10 years ago.
Otherwise we have a society that is incapable of grasping reality and lives in a state of delusion. I am not ready to admit that.
goblue72
@agorabum: Agreed. I’m in the real estate development industry (multifamily/CRE, not SFH), and by 2007, the housing market was already in trouble and accelerating to deep doo-doo. Housing prices peaked in 2006. In 2006-2007, home builders were already have inventory trouble. Foreclosures started to increase at that time as well. In 2007, the subprime mortgage industry was already in collapse. Lehman closed its subprime arm in mid-2007, a full year before it went bankrupt. Home builders were still building product in 2007 because projects were already under construction and once you start construction, its better to just finish. But the front end of the pipeline was already getting slammed shut – very little interest by 2007 in financing the acquisition of buildable lots.
We aren’t at that point in the cycle yet. Though, I personally feel that the residential rental market has gotten too hot. Significant YoY rent growth has gone from something happening in certain core, mostly tech- and finance-sector markets (SF, Boston, NYC, Seattle, Denver, etc) and now much more spread uniformly across the country. When local RE markets stop being driven by local fundamentals and start getting synchronous nationally, I start to worry.
While some of this has been driven by the incredibly cheap debt markets (thanks Fed!) and foreign equity capital looking to the U.S. as one of the few consistently growing/stable Western markets (thanks Chinese & Arab investors!), a lot has been driven by job growth in some key sectors – primarily tech. The energy sector gave us a liftoff as the growth industry coming out of the Great Recession, but its Web 2.0 that is now a core fuel of the current economic growth in the U.S.
Could be I’ve spent the last decade-plus on the West Coast in the Bay Area and in Seattle, but its all starting to feel a bit like the late-1990s dot com era, though a little bit less silly in terms of business plans and the equity markets aren’t quite as giddy-stupid. Still too many unicorns for my taste. 2016 could be more of the same, or it could be the year that tech wakes up with a head cold.
goblue72
@jl: Fed’s itch to raise rates is not entirely about inflation. Fed has no confidence in the Federal government at this point in terms of the Executive and Legislature not being at complete loggerheads, which means fiscal stimulus is off the table from the Fed’s perspective.
Which leaves only monetary stimulus to fight the NEXT recession. And the Fed doesn’t have much fuel in the tank right now with rates so low. So they are stuck trying to bring rates up without tipping things too fast, so that the business cycle can gradually do its thing and the Fed can be sitting on 200 – 300 basis points of gunpowder for the next recession.
jl
@gene108:
” I just think the reason all this good news does not sink in, even when it is reported, is just that people’s personal situations are not that rosy compared to 10 years ago. ”
To the extent that Fox News, GOP and GOP friendly corporate hacks dominate the news media, this may be a big factor. Working class and lower middle class adult and older adult Whites wealth and incomes really got hammered in the last recession and their labor market recovery prospects much poorer than in previous recoveries, much more so compared to youth and African-Americans than in previous economic cycles.
Now, in one respect it is hard to feel sorry for them. One, in terms of absolute levels of income and wealth they are doing far better than youth and young adults, and African-Americans. Two, at least a plurality of them have been consistently voting for politicians that have very consistently adopted policies that would, sooner or later, hit them very hard.
But if the political reality is that people make decisions and form attitudes based on their recent changes in their welfare, rather than in absolute levels or comparison of trends over longer time horizons, then this group is feeling very depressed and grumpy and gloomy and picked-on.
And of course, sadly, a plurality of them will gripe about kids these days being pampered lazy and whiny and ‘those people’ taking all their jobs and money (which is BS, but this group eats up BS, and problem is how to correct their delusions and bigotry).
Thoughtful Today
Richard Mayhew:
Krugman puts it at the two quarters before the election: “A nation’s leaders may do an excellent job of economic stewardship for four or five years yet get booted out because of weakness in the last two quarters before the election.”
Though I’d love to see evidence that the bulk of the American electorate have a longer memory….
I’m sincerely worried the Fed will hit the breaks … just in time /sarcasm … for the 2016 election.
Hoodie
Looks like the GOP plan to stall recovery and politically capitalize on it was not quite right on the timing. Their best chance was in 2012, but Obama was too skilled and/or they were too inept. Seems like they’re currently trying to create an alternative reality that things are going to hell in a handbasket, but economic data like this going into next year is going to make that tough sledding. I imagine their pivot early next year will be that their obstructionism kept that big spendin’ fool Obama in check and that’s why the economy is now improving and we now need a tax cut for rich folks to keep things rolling. I guess there’s nothing dems can do about that, the GOP will always make up fairy tales.
Richard Mayhew
@Thoughtful Today: interest rate trickle through on the housing channel is slow with a nine to twelve month lag. 2 quarters is March/April before the election so the end of Q1 and start of Q2. We are paraphrasing the same policy sci research from different angles
Bill Murray
I would take half the value of the problem off if any student in one of my classes interpreted that data as showing an increase with time.
mclaren
@Bill Murray:
Welcome to the magical world of Mayhew, where random noise fluctuations get reinterpreted as a rising trend.
Mayhew gibbers “A decent economy with growing wages is good, all else being equal, to incumbents without regard to party,” suggesting that the 2015 economy is actually pretty decent. Happy, happy, joy, joy! Things are looking up! Prosperity is just around the corner!
Meanwhile, back in the real world, Larry Summer writes:
Source: “Advanced economies are so sick we need a new way to think about them,” Larry Summers’ blog, 3 November 2015.