Malevolent Astrology, or, Good, Good, Good, Good Vibecession

The Biden economy is humming! The Roaring 20s are back! Why doesn't it feel that way?

I didn’t want to write about economics, because I don’t really know anything about economics, and there’s nothing worse than people who don’t know what they’re talking about talking about something with authority. Then I remembered that plenty of economists don’t really know anything about economics, either. Like, an entire school grew around the greed-is-good, don’t-fuck-with-the-Invisible-Hand economic theories of Milton Friedman, who wound up being wrong about almost everything. Seriously: if the Chicago School were a branch of English literature and not economics, it would be a bunch of libertarians denouncing adverbs for ruining the purity of the prose and insisting that Ayn Rand is better than Shakespeare because Atlas Shrugged moved more units last quarter than The Two Gentlemen of Verona. So I think I can safely weigh in.

“Economics,” the historian Rebecca Brückmann wrote, “is really just malevolent astrology.” That is the best description of that dark art that I’ve ever come across. What was Milton Friedman if not a malevolent astrologer? Economic data is akin to planets and angles and transits. “Unemployment is at four percent” is John Kenneth Galbraith-speak for “Jupiter is in the Fourth House.”

Collection of the data is a science; interpretation of the data is an art. So, too, is how to frame that data. And that’s why I’m writing about economics today, even though I didn’t want to write about economics.

There is a battle raging right now regarding the health of the economy under President Biden: a discrepancy between the positive economic indicators and the negative feelings many Americans seem to harbor about all things financial. Are people feeling meh about a strong economy? Or is the economy not actually so great, despite the rosy outlook? Strong opposing opinions on this question between two extremely online economists, Nate Silver and Will Stancil, led to a fierce social media quarrel recently that appeared headed to pistols at dawn, until the former blocked the latter—the Twitter equivalent of calling for the surgeon—and the latter’s honor was satisfied. A helpful Reddit user named HoyaRugby offered a synopsis of the beef:

As a tl;dr: Stancil is arguing that negative feelings about the US economy are “vibes” brought on by negative media coverage and social media, not reality. Silver is arguing that people feel bad about the economy because things are not actually very good. The specific argument is about whether “real wages” (wage growth minus inflation) are positive or negative for most Americans. Using economic statistics, Stancil is correct, and Silver is misreading a chart which shows an artificial increase in wages in early 2020 caused by many low wage workers getting fired, which on paper raises average wages.

In short, the battle was between vibes and data.

“Vibes vs. Data” also happens to be the title of a recent piece by Noah Smith, an economist who knows quite a bit about economics, on his fine Substack, Noahpinion. He explains:

As we gear up for election season, a big debate is whether the U.S. economy is doing well or not. Biden supporters point to extremely low unemployment, falling inflation, and real wages that have started rising again. Biden opponents — including both conservatives and socialists — contend that the inflation of 2021-22 left such a severe scar on Americans’ pocketbooks that low consumer confidence is perfectly justified. Biden supporters counter that since inflation has come down — and was never as severe as in the 1970s — the anger over the economy is just “vibes”.

Basically, the Biden supporters are right; the U.S. economy is truly excellent right now. Inflation looks beat, everyone has a job, incomes and wealth are rising, and so on. But on the other hand, I can’t command people to simply stop being mad about the inflation that reduced their purchasing power back in 2021-22. People care about what they care about.

I will add, for purposes of context, that just two years ago, doom profiteers like Jack Dorsey were prophesying a cycle of hyperinflation that would, as the former Twitter CEO ominously suggested, “change everything.” He added, “It’s happening.” It was, in fact, not happening, as those of us who could actually define “hyperinflation” said in the moment. (The indispensable Dave Troy has written extensively about how this gaggle of mega-rich libertarian weirdos want to tank the dollar and crash the global economy because crypto.)

And now? Forget about hyperinflation; even regular inflation is under control, and to the shock of many, many malevolent astrologers economists, the Fed has staved off a recession. This is a huge victory for the Biden Administration, but it’s unlikely to have much impact on undecided voters. “Hey, it could have been a lot worse” is never an effective campaign slogan.

If we go by the numbers, then yes, as Smith says, the U.S. economy is totally kicking ass, Rocky Balboa style. Gonna fly nowwwww. And yet, at least in my world, there is a disconnect between those numbers and practical reality. I wouldn’t quite call it a “Vibecession,” a clever term coined by financial analyst Kyla Scanlon, but it ain’t exactly the eye of the tiger, either. All the charts and graphs on Janet Yellen’s hard drive can’t change the fact that the same box of Fancy Feast that in 2019 cost $14 now sells for $22—while wages have been flat and my senile old cat demands more food than ever before (see photo above). Stuff’s just more expensive now. It was noticeable last year when I was in Berlin; almost everything there was cheaper, even with the exchange rate.

This isn’t Biden’s fault. There’s not much he can do to reign in corporate greed—like Noah Smith, he cannot command people to stop being pissed about inflation—but ignoring its existence while lauding full employment numbers doesn’t make anyone feel better. As podcaster extraordinaire Tony Michaels told me on the PREVAIL podcast a few months ago, people don’t respond favorably to being lectured to. Condescending dorkdom doesn’t change anyone’s mind. Charts and graphs and data turn off voters. Here’s a pretend dialogue:

DEMOCRATIC STRATEGIST: How do you feel about the economy?

GUY IN STREET: Honestly, not so great. Groceries cost a lot more than they did a few years ago.

DEMOCRATIC STRATEGIST: Sorry, friend, but you’re wrong! The economy is hot! Unemployment is down and inflation is in check! Here, take a look at these amazing data points I’ve plotted on this chart!

GUY IN STREET: Fuck off.

Most people view the economy through their own personal lens: How does this affect me and my family? As a non-economist, I can tell you exactly why many people are not overjoyed at the economic picture right now: the interest rates are too high. This ain’t complicated. Look at this shit:

I understand, intellectually, that the rates have been high because rate-raising was the lever the Fed pulled to stave off recession. I get it. Give Jerome Powell his flowers. I also understand that the president has no direct control over the rates. But again: “Hey, it could have been a lot worse” is never an effective campaign slogan. And we have an election to win!

When we bought our house 12 years ago, the interest rate on a 30-year fixed mortgage was 3.25 percent. Today it’s more than double that: 7.5 percent. The monthly payment on a $250,000 loan—which is about how much cash Brett Kavanaugh materialized out of thin air for his down payment, but I digress—is $1,088 for the former and $1,752 for the latter. That’s an extra $664 a month, every month—almost eight grand more a year. And yeah, the interest is tax deductible, and yeah, homeowners can refinance when the rates go back down, but in the meantime? That’s brutal. This goes for buyers as well as people who have significant equity in their homes that they want to access because their kids are going to college, but now cannot without paying an arm and a leg. That’s the cause of the “Vibecession.” Duh.

Regular readers of this column know that I am a huge Biden stan. There is literally nothing he could do, including drop dead, that would make me not vote for him. So why am I writing about economics today—and using a subtitle that sounds like a New York Times Pitchbot tweet, for good measure? Because the bad vibes are real, and, as I see it, they are caused by the high interest rate, which is personally impacting millions of voters adversely. The Biden campaign needs to understand this.

Fed watchers believe the rates will go down next year. That’s good news. The lower they go, the better Biden’s chances of victory. Because you don’t have to be an astrologer, malevolent or otherwise, to forecast what’s coming: the GOP is going to campaign on the bad vibes. The campaign must be ready. And guys? Some nerdy PowerPoint presentation is not going to change the mind of a single voter miffed by the high interest rates or the inflated cost of goods.

One last time, for the people in the back: “Hey, it could have been a lot worse” is never an effective campaign slogan.

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Photo credit: my 16-year-old cat, Leo, in his usual spot.