How To Criticize Anything About the Economy (and Still Be Right or Wrong)
This column begins with a confession. I am not an economist. The last course I remember taking in economics specifically was in college but, in fairness, I did study government budgeting during one graduate program at West Chester University years ago. Still, what I have to say I believe applies to most commentaries on the economy and is probably no more right or wrong than statements made by many economists out there. So, here goes.
First, it seems that almost anything that affects one metric negatively may affect another positively. Therefore, it is difficult to make generalizations. Here is one example.
A headline in advance of a likely rate cut by the U.S. Federal Reserve Bank from the Associated Press by Stan Choe states “Savers already are feeling the pain ahead of likely start to Fed rate cut.” Monday, September 16, 2024. Keep in mind that, for several months at least the public discussion has been concern about the high interest rates imposed by the Federal Reserve. Interest rates have been identified as one reason why mortgage rates, as just one example, have been so high which then affect the housing industry and new home buyers. Interest rates on loans including, for example, home equity lines of credit (HELOC’s) have also been considered a cause for concern.
The article could have stated, in the alternative, that a likely reduction from the Fed is a positive since, in that way, it helps to relieve pressure on consumers. Instead, it was described as a negative. This reminds me of an expression I first heard years ago. “You just can’t win.” One person’s positive can be another person’s negative. Buying a house for many consumers today is a concern and there probably should be discussion how that can be addressed. Lowering interest rates could be a step in that direction.
Next example. Another headline I read recently stated “Labor costs still high, but wage growth is slowing for some” by Mae Anderson also of the Associated Press. The report included statements by some employers who noted that labor costs are among their largest expenses which should come as no surprise. They do note that labor costs are “seeing <some> signs of stabilization.” Wage “stabilization” may be a good thing for a number of employers. One question is the end result.
We might remember that, during COVID and the Public Health Emergency (PHE) especially there was a call for higher wages for employees. This obviously related to attempts to get employees to return to work. It also considered the fact that many Americans, especially those in the lower wage categories, needed funds to survive the difficult times. Is it a good thing or a bad thing that wages could be “stabilizing?” It may depend on whether you ask the employers or the employees. Also, remembering that employers, especially small businesses, went through a horrendous time and worked for survival needs to be considered. These two examples may be likely reasons why some presidential debate proposals suggest help to individuals, for example, to start up new businesses and also suggestions regarding deductions and credits.
On inflation, the current inflation rate as of September 11, 2024 as reported by the CPI-U (Consumer Price Index All Urban Consumers) is 2.5% which was reported by them as the lowest since February 2021. This raises an obvious question. Why do consumer expenses seem to be so high? By comparison with pre-COVID that certainly is a valid question.
One answer again may be related to the COVID PHE experience. The inflation rate pre-COVID is reported by the CPI-U as somewhat lower than the present. It appears, using the same index that 2022 was the year when it increased dramatically to 8.0%. The year 2023 was reported at 4.1%. There were also supply chain issues which many of us remember. For my own business I remember waiting six months from purchase for what turned out to be an excellent high volume sophisticated copier. Many items were not available on the shelves at all and substitutes needed to be found.
Were there some suppliers who overcharged? That is one question raised. In years past when there were gas shortages the price sometimes
seemed to shoot up more than what seemed reasonable.
So the bottom line is that what appears to be a good thing to one person might not seem to be for another and fair solutions need to be discovered.
About the Author Janet Colliton
Esquire, Colliton Law Associates, P.C. Janet Colliton has practiced law for over 38 years, 37 of them in Chester County, Pennsylvania, a suburb of Philadelphia. Her practice, Colliton Law Associates, PC, is limited to elder law, Medicaid, including advice, applications and appeals, and other benefits planning including Veterans benefits, life care and special needs planning, guardianships, retirement, and estate planning and administration.