Join institutional investors, analysts and strategists from the world's largest banks: Subscribe today
Already have an account? log in
Disappearing Disinflation
This week's only marquee data release out of the world's largest economy was amenable to a pessimistic interpretation.
That's me being polite which, contrary to popular opinion, is my first inclination, if not my second or third.
ISM manufacturing printed 47.7 for February, a touch lower than the 48 consensus expected, and still in contraction territory.
The final read on S&P Global's gauge for US factory activity in February was 47.3, down from the flash reading but up slightly from Ja
Maybe the Fed needs a little help from those in charge of the fiscal policy.
You’re right! We could start by raising taxes on those with incomes in the top 10% to stop them from spending on things they absolutely don’t need and see how that works. After all, those Americans won’t miss the money. Why do your or I need another vacation? Or more towels? Or more clothes? Or more anything, really? Why can’t we forgo some of those expenditures for a while to help bring down inflation? And if we can’t bring ourselves to do that, then why shouldn’t fiscal policy force us to, by taxing away our capacity to increase inflation with superfluous buying? Why is that any less fair than cutting off aid to people who are less fortunate? Why can’t you and me make do with a big, bargain tub of Folgers for a while instead of constantly blowing $15 for a small bag of whole bean, single-sourced, organic coffee?
And really…while we don’t like paying taxes any more than the next person, most of would still be able to manage plenty more vacations, towels (have too many already!) and clothes (ditto, and I hate shopping!). My grandfather’s income and net worth, after a lifelong career with the same major financial institution – where he retired as President and Chairman of the Board — was never more than a modest single-digit multiple of the median of that of his employees. And he was plenty happy and comfortable, even as a 1%er in his day.
With only a few exceptions tied to sudden windfalls, the more money I made in life the less money I was inclined to spend. For me (and maybe I’m alone in this) the digitalization of all things money has decreased my interest in it, not to the extent I don’t enjoy having money, but just to the extent it’s even more apparent now how ephemeral it is — it’s just numbers on a screen.
I remember vividly living in small towns before the internet and having to — you know — get in the car and drive down to some nondescript building, wait in the drive-through line, pull up to the window and pay the water bill. You had the actual bill with you, and you’d hand it to the lady, and she’d make some notes on something, and then you’d hand her some bills and some coins, and then she’d give you a receipt and one of those Dum Dum suckers for your trouble.
I think a lot about what we’ve lost when we get rid of all that. Those were local government jobs, they fostered a sense of community, you had a real physical connection with money, you had to actually go out of the house to get stuff done and that contributed to a sense of accomplishment even around mundane tasks, and while you were out, you might stop and get a sandwich somewhere, and so one. All of that’s gone now.
The other day I paid property taxes to a chat bot. It was astoundingly convenient and for a second I was very pleased with the experience. Then I thought, “You know… is the cumulative effect of all these ostensible ‘conveniences’ good?” I don’t know. I really don’t.
I completely agree with raising taxes on the top 10%.
Unfortunately, the stimulus payments turned out to be a loan that is being paid back via inflation. Those who needed it are now “repaying” the amount via higher living costs.
My original comment was made as a result of my frustration with how poorly I think our elected representatives govern- across both parties.
Or maybe gains in stock portfolios and home prices were a loan to the rich that’s now being charged to the poor as a tax via high inflation.
You have a penchant for posting passive aggressive, trickle-down economics propaganda, and it doesn’t go unnoticed. I know you don’t regard it as propaganda, and you might not even identify it as trickle-down, but whether you realize it or not, it’s both. Some of what you post could be construed as offensive to the handful of readers here who aren’t fortunate enough to land in your tax bracket. For example, when you suggested the other day that the cost of college isn’t spiraling, it was clear that you didn’t understand how positively ludicrous that assertion is. The inflation-adjusted average college debt burden is up 500% over the past 50 years. All of that to say that I worry you’re not very self-aware sometimes when you vent what are clearly frustrations with Progressive policy choices via your comments here. For the most part, you have a friendly audience given what I assume is a pretty high average household income among my readers. But nevertheless, you should be aware that there are progressives who come here and there are dozens (at least) of college students who subscribe. They’re not terribly enamored with the Ronald Reagan spiel.
Dear Leader – though I disagree with some posts, I find E-nester’s comments pretty consistent with many of your other regular commenters. In fact, E-nester seems more open than many to pondering counterarguments.
As you rightly point out, many of us are, indeed, blessed to be in a fortunate place. Recently I’ve noticed that it leads many to look at their personal situation and that of their circle of equally prosperous friends, family and coworkers as being representative of the whole US population.
A hobby that forces you to spend in-depth time with the 80% not so fortunate as you would do them some good. I don’t mean a conscious – salving stint serving the gravy at a Thanksgiving meal at the homeless shelter. Rather, one where you become friends and hear how devastating a car repair can be to an already overly tight budget. Or hear that it has been 12 years since they last had their teeth cleaned at a dentist’s office.
Thank you, and now I yield my space on the soap box.
I love this site – and the commentary. H, you run a tight ship and it really pays off. The only downside is I’m totally hooked and there’s no plan B as far as I’m concerned.
Don’t worry – H has penned enough content that generative AI will be able to take it and run with it soon enough. Just need someone to feed it the weekly stream of content that H consumes each week 🙂