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Brian Lehrer: It's The Brian Lehrer Show on WNYC. Good morning, everyone. We begin with some good news today. In fact, more good economic news from over Thanksgiving weekend, adding to the spate of positive economic indicators lately. This includes prices on some major items going down, not just going up more slowly. After all the concerns about inflation, after all the actual inflation of the last few years, from what I've read, things are actually getting cheaper now, including everybody's favorite indicator, gasoline.
Also, airplane tickets, electronics, including cell phones, televisions, computers, also sheets and towels, get ready for those white sales, and also, the cost of a typical Thanksgiving dinner actually down from last year. Also, Black Friday and Thanksgiving weekend sales, this is the new good news, are reported to have hit record levels online, although the mob scenes at big-box stores on Black Friday morning seem to maybe be kind of a comic relic of the past at this point, with so much shopping of all kinds apparently shifting more permanently online even post-pandemic.
Overall, The Wall Street Journal reports Black Friday spending was strong, but despite all these positive economic indicators, polls show Americans still very sour on the state of the economy, and that has political implications for 2024. Catherine Rampell joins us to discuss. She is an opinion columnist at The Washington Post, politics and economics commentator at CNN, special correspondent for the PBS NewsHour, and a contributor, as some of you know, to the public radio program Marketplace.
Among her recent writings, Catherine had a column in The Washington Post last month called, When Will Americans Stop Worrying and Learn to Love the US Economy? Hi, Catherine, always good to have you on. Welcome back to WNYC.
Catherine Rampell: Great to join you.
Brian Lehrer: That column is a month old now, published on October 26th, but you wrote at the time that the US just had a stunning jobs report, followed by a stunning GDP or economic growth report. Want to start there? Why did you use stunning for each of those?
Catherine Rampell: Because we had had these gangbusters numbers. I think at the time, we had gotten in really way above expectations numbers for job growth, for example. That's since been revised down a little bit, but still, for the prior month, it was quite strong. Even since then, the jobs numbers that have come in have been solid, at the very least. The GDP number that I was referring to had us at an annual growth rate of 4.9%. Again, not what you would expect when an economy is in recession, and obviously, we've been hearing warnings about recession for a year or so now. None of that comports with those dire warnings.
Yes, we've had a lot of good numbers on paper, anyway, that indicate the economy is doing strong, certainly relative to the fears that we would fall into a downturn, as has often happened following a spate of high inflation, and yet, despite those numbers on paper, consumers don't buy it. [chuckles] It's stunning in the sense that it defies the historical record, and it seems to defy what consumers say impressionistically about the economy around them.
Brian Lehrer: Well, you used the phrase consumers don't buy it, but the Thanksgiving weekend, Black Friday, et cetera, numbers seem to indicate consumers are buying a lot.
Catherine Rampell: Yes, that's fair. What consumers say about the economy and how they behave, those things are somewhat at odds right now. This is another one of these puzzles about the economy at the present that consumers seem very down on the economy. In fact, by a number of consumer sentiment type metrics, they are as pessimistic about the economy today as they had been during stretches of the Great Recession when unemployment was at around 9% or higher for many of those times when consumer sentiment was quite pessimistic.
They say they are unhappy about the economy, and I believe that they are unhappy about the economy, and yet, their pocketbooks seem to indicate otherwise. They are unhappy about high price growth, but they're still willing to stomach those prices and go out and buy. How you reconcile those things is really complicated. I think it just suggests that consumers still have some accumulated savings that they're able to spend.
They're resentful of the fact that they have to pay higher prices but at least some subsets of those consumers can still afford those higher prices and so are going out and spending money.
Brian Lehrer: On the prices, the latest inflation report was also encouraging down to an annual rate of 3.2%. That's a fairly fast turnaround from the 9% rate that was so troubling last year. How would you characterize the mix of inflation and deflation like with some of those things that are actually going down in price that I listed in the intro?
Catherine Rampell: This part is very counterintuitive or I should say unintuitive. I think a lot of Americans are waiting for prices to go down. That is, I often hear people ask me, when are prices going to go back to where they were before the pandemic, circa 2019 or even 2020? We should just not expect that to happen. For individual items, things like you mentioned, a Thanksgiving meal, the price of turkey, has actually gone down in part because we had a bird flu last year and the stocks of turkeys have been replenished. For the same reason, egg prices have gone down because of the bird flu.
A few isolated examples of consumer goods, their prices have fallen, but the overall price level over the long run basically always goes up. You might see some fluctuation again, gas prices, turkey prices, et cetera, some particularly salient items, but over time, the overall price level, so the average of all the things you buy, let's say, does go up. That's, in fact, what the Federal Reserve is aiming for. They do not want overall prices to fall despite consumers perhaps thinking that they want them to fall.
When that happens, when the overall price level has gone down, and again, there are very isolated examples of that in American history, that's usually a warning sign that a recession or even a depression is at bay. It's interesting. The thing that consumers think that they want is not even the thing that the Fed is aiming for. In fact, if consumers got what they wanted, that would be a sign that the overall economy is in quite a bit of trouble.
Brian Lehrer: If the economy is growing around 5%, as that latest report indicates, that is so high by historical standards. When Trump was running for president in 2016 against Hillary Clinton, he was saying, "I'm going to create a 3% economic growth rate." Everybody said, "Oh, you can't do that. That's too ambitious." He did it. 5% is unbelievable, and running around 3% inflation, that means growth is outpacing the growth of prices.
You wrote in your column that remarkably, the economy is actually growing faster than was predicted even before the pandemic hit and changed everything, and also, that this is not true for other countries. Can you give us a brief bit of that international context?
Catherine Rampell: Yes. The United States, as I mentioned, has been exceeding expectations relative to a few months ago about where GDP would be, where job growth would be, where even inflation would be. That we've done better than we thought might have been the case a few months ago, a year ago, but not only that, we are doing better than had been predicted before this cataclysmic event of the global pandemic happened, which is unusual.
You would think there would be some scarring effect from the fact that we had a pandemic and it wreaked a lot of havoc on the US economy, not to mention lots of other outcomes like health and mortality rates. The United States is doing better than those pre-pandemic forecasts. The rest of the world is not. If you look at the EU, for example, or other developed countries, you look at middle-income and lower-income countries, generally, they are doing worse than had been forecast before COVID hit, which is understandable.
You would imagine, again, that there would be some scarring effects from that event, not to mention that we've had a number of other shocks. The EU is dealing with an energy shock that is affecting those countries much more severely than the United States because they're much more exposed to the war in Ukraine.
Brian Lehrer: Let me jump in and ask you this in our last minute. We have one minute left. On the US doing better than other countries, can you say that's because of any Biden administration policies since this all has political overtones for next year or just more economic factors that are mostly independent of politics?
Catherine Rampell: I think it's really hard to assign exact credit. I suspect that the recent round of industrial policies, so big spending on the CHIPS Act, as well as infrastructure and some of the climate measures, those may have juiced the economy a little bit and may be partially responsible for our above trend numbers. Whether those will last, I don't know, but the United States has a lot of things going for it, including that, again, we are much more energy-independent than other countries.
That's not about Biden, that's just about the fact that we have a lot of fossil fuel resources in the United States. We've had a surge of immigration, which I know is a very controversial thing, but has helped keep our labor markets more well supplied. That's contributed to a lot of the job growth. How much of this is about Biden, how much of this is about other factors, I think that will be for economic historians to tease out.
Brian Lehrer: Washington Post columnist, political/economics commentator at CNN, special correspondent to the PBS NewsHour, and contributor to the public radio program Marketplace, Catherine Rampell. Catherine, thanks so much.
Catherine Rampell: Thank you.
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