The Wall Street Journal asked 69 economists what they thought about the economy. Let’s check out the results. 
By nearly 20 percentage points, a WSJ Survey of Economists said Biden would be better for the economy.
Unfortunately, the Journal did not ask the economists why. The answers would likely have been humorous.
Federal Funds Rate
Roughly one-third of respondents in the most recent survey predicted that rates would end the year at 4.75% or higher, implying just two cuts—up from 11% in January.
Labor Market
Economists have a tendency to project current trends well into the future. Jobs were better than expected last month, so economists project that into the future.
Core PCE Inflation
How Inflation Predictions Work
Economists want the Fed to get inflation under control, so that is what they predict.
The Fed operates exactly the same way, perpetually predicting what they want. Hubris applies.
The result is a goldilocks prediction.
Probability of Recession
I am kicking myself for this one. It was a huge warning sign when I was with the consensus.
Where’s the Recession?
When Industrial Production Peaks, recession soon follows. The only exceptions were the lengthy lead time ahead of the Covid recession, and now.
Industrial Production fell steeply from September of 2022 December of 2022. The dive in manufacturing started a month later and was steeper.
Recession Lead Time After Industrial Production Peak
Yesterday, I asked Industrial Production Peaked 18 Months Ago, Where’s the Recession?
Not only did IP peak, but housing crashed, real Gross Domestic Income was -3.0 percent in the 4th quarter of 2022, and retail sales took a dive.
Synopsis
- Housing Starts: -25.7%Real Retail Sales: -4.1%Industrial Production: -1.9%Real Gross Domestic Income 2022 Q4: -3.0 Percent
Allegedly, there was no recession. And I don’t think the NBER will call one either.Everything started to stabilize at the beginning of 2023. Why?
Two big things happened
- President Biden signed the IRA on August 16, 2022. On April 27, 2023 I noted The Inflation Reduction Act Price Jumps From $385 Billion to Over $1 Trillion
- On February 28, 2023 I explained Huge tax cuts on Jan 1, 2023 coupled with big minimum wages hikes in over half of the states.
I left off a third one. The massive surge in immigration led to a binge of government social work hiring.
On March 8, 2024, I noted Jobs Up 275,000 with 52,000 More Government Jobs, Employment Down 184,000
The economy continues to add a high percentage of government and social assistance jobs. Part time employment rose by 691,000 as full time employment fell by 6,000.
Nonfarm Payroll Change by Sector
Government and Health Services are related to the surge of illegal immigrants and the need to address them. Social assistance jobs rose by 30,000 in January and another 24,000 in February.
On April 5, 2024, I noted Jobs Up 303,000 Full Time Employment Down 6,000 in March
Payrolls vs Employment Gains Since March 2023
- Nonfarm Payrolls: 2,927,000
- Employment Level: +642,000
- Full Time Employment: -1,347,000
Full Time employment is down by 1.35 million since March.
Inflation has kicked back up. And economists are predicting rosy soft landings.
This time, I am not with the overwhelming majority. I prefer it this way.
Finally, economists may think the Fed has everything under control, but I don’t and neither does gold.
Gold vs Faith in Central Banks
That chart more than anything else explains the movement in gold.
For discussion, Gold’s Strongest Move In a Year Was When the Dollar Was Rising
Economists have huge faith in Biden and the Fed. Gold does not have much faith and neither do I.
“ The Fed operates exactly the same way, perpetually predicting what they want”
The Fed needs to put on this face. They cannot predict anything else.
If they predict high inflation they need to say their actions are taming it.
If they predict low inflation then they need to say they are working to stimulate.
If they predict anything off the charts and say “we are in trouble” – this would cause mayhem.
It really isn’t Biden’s fault the Fed didn’t hike rates sooner and faster in 2022. They were late as usual. But they could still hike them now and do a couple of other things to tamp down inflation. Powell will be channeling his inner Volcker soon.
“When Industrial Production Peaks, recession soon follows. The only exceptions were the lengthy lead time ahead of the Covid recession, and now.”
We are in unique territory. All manner of different records set since the Covid lockdowns. Everything is so out of whack, including society.
Economists don’t live in the real world. In the real world, the cumulative rate of inflation since 2020 has been 20%. link to usinflationcalculator.com
Recessions are a healthy and essential feature of the economy’s cyclical nature, a self-healing process. Recessions help to clear out imbalances and misallocation of resources within the economy and free up financial and human capital for more productive purposes.
Well the stats show that the economy, job growth, and the stock market all do better under a Democrat President. Feel free to look up the stats. They are available in many places. So I guess it’s a no brainer for economists to keep assuming that Biden will be better. Which is what Mish said they would do.
And although every Republican president since 1920 has had a recession begin on their watch, only 1 Democrat President had a recession begin on their watch. Feel free to look that up as well.
Fortunately, I can make money in a recession too, so bring on Trump and another recession. I love the challenge.
“Well the stats show that the economy, job growth, and the stock market all do better under a Democrat President. Feel free to look up the stats.”
The Nasdaq dropped 45% under Clinton, into inauguration day 2021. The 2021 recession began a few months after Clinton left office. Bush had not effected the economy, yet. Economists kept looking for green shoots when Obama was president. The stock market took off in 2009, when FASB was threatened by congress, to allow banks to lie about the value of their assets. Unemployment was high all during the 1930’s, Under Roosevelt. Under Republican Coolidge in the 1920’s it was known as the roaring 20’s. Pick a bunch of cherries and put them in a bowl. Currently, debt is well outpacing GDP growth. Even Powell is expressing concern over that.
No one likes hearing that Dave. Trump won’t bring a recession. He will bring something a lot worse imo.
What is your tactic for making money in a recession other than shorting and then buying cheap. It is hard to time the market.
Hoot? The unpaywalled WSJ says “academic, business and financial economists”. Well, count the first group 100% Democrat. 🙂
Academics are the vast majority of “economists”, but lets err on the side of caution and stipulate they are only 50% of economists. 94% of academia is democrat (extreme democrat). Lets stipulate the private sector economists are 50/50 democrat and republican, something similar to the broad population.
Using those assumptions, ((94% * 50%) + (50% * 50%)) = 72% would be expected to say Biden. Yet only 46% support Biden in the WSJ poll.
The poll really says Biden is a screw up, because he should poll much higher based on the political leanings of the economist “profession”
Great point! And that 50/50 split is being super-generous to Biden. It would not be a surprise if those “private sector” economists work for .gov or .org outfits. Uncomfortable, at best, with Trump’s outsider / deep-state rhetoric.
Only 27% two handed economists? What world is this?!?
It cannot be argued that the economy does better under a Democrat president. Clinton, Obama and now Biden all took over failed economies and were able to turn them around.
LOLOLOLOLOL
The economy and job creation stats based on who is in the White House. Better under Democrats.
https://www.jec.senate.gov/public/_cache/files/309cc8e1-b971-45c6-ab52-29ffb1da9bf5/jec-fact-sheet—the-economy-under-democratic-vs.-republican-presidents-june-2016.pdf
Stock market better under Democrats.
link to nber.org
Every Republican president since 1920 (has had a recession start on their watch, vs 1 Democrat (Carter).
link to finance.yahoo.com
Fortunately, I don’t care who is in the White House because I can make money when the economy is growing OR when in recession. Bring on Trump and the next recession. I will still make money.
I love the negative votes but no one can truly deny the economy has been stronger under democratic presidents after Carter. Please note this says nothing about debt or policy. It is simple performance. Since Reagan, the Republican president always leaves their successor with a bad economy at best.
No denying Clinton had a great economy. Not sure he gets the credit but he would get the blame if it was reversed so…Clinton gets the credit.
We have a choice this presidential year. We can vote for Biden or Trump. It’s a dumb or dumber redux. Central banks do not believe in capitalism and for years they corrupted interest rates by leaning against the forces of price discovery. They instituted a zero interest rate policy with QE, making money free so the federal government could borrow an unlimited amount of money with little debt service consequence. They forgot there’s tomorrow. So that worked for a while because there was a lot of borrowing and massive new money creation. Big players borrowed the free money and all that new money went into stocks and into bonds and into real estate causing inflation in the asset sector. When central banks artificially suppressed rates, the bond market bubble occurred because we had the lowest interest rates in 5000 years. Free money is popular and America became addicted to it. But free money and zero rates don’t exist in the real world of capitalism so central banks broke a fundamental law of capitalism, because money can never be free. Capital, in capitalism, must have a cost for the system to work; it cannot be zero. That punch bowl was removed when consumer inflation rose in real terms to over 10%, which was the result of too much money in the system…massive amounts of new money hit the economy during COVID. House price inflation rose aggressively when the 10-year treasury rate was under 1%. So did car prices and car insurance prices. When money is free, it causes inflation. 80% of all the money ever created in America was created since year 2000. 60% of all the money ever created in America was created since the Great Financial crisis when ZIRP and QE began. So the ten year rate got as low as .6% in 2020 because of ZIRP and QE, but when that nonsense stopped because of consumer goods inflation, the 10-year rate jumped to 5%…an 800% increase. The FED created an interest rate trap and while they were no longer created new money through more debt during the ZIRP period, Trump and Biden created tons of new money with massive deficit spending in 2020, 2021, 2022. The deficit in 2020 was over $3 trillion, and in 2021, it was nearly the same. So all that money hit the economy. Hedge funds borrowed and they bought stocks with the free borrowed money. This created a stock bubble, a bond bubble and even a crypto bubble. There was a house bubble and a condo bubble as well. We had a similar debt orgy in the 1920s and we know how that debt bubble ended starting in 1929. Tremendous amounts of new money were created in the roaring 20s through more and more debt, but that debt was liquidated during the Great Depression, and the money supply fell dramatically, along with the price of stocks, homes and everything else. This debt bubble created by central banks will follow a similar pattern and it will be worse because the debt bubble is worse.
Re “We can vote for Biden or Trump”
As a nation, we missed the chance in the primaries to select better candidates. The 2 parties were not helpful to the nation in this respect. Now we face the consequences.
“As a nation, we missed the chance in the primaries to select better candidates. The 2 parties were not helpful to the nation in this respect. Now we face the consequences.”
This isn’t on us, it’s a consequence of Citizen’s united, candidates that represent those who make the largest campaign contributions make it to the top.
One side might represent oil executives interests, the other might represent healthcare executives, the rest of us get to pay for it, and vote for whomever is presented by these wealthy interests.
Anyone who thinks effective tax rates for billionaires should exceed single digits gets filtered out before their name is even known.
Entltlements like Social Security, Medicare, Disability payments will continue going higher until the baby boom generation are all retired and receiving benefits. It’s politically impossible to cut those programs without Senators and Congressmen getting thrown out of office. Nearly 75 million people are getting SS. That will take a lot of new money so prepare for a continuation in the orgy of borrowing. We will borrow until no one wants our debt, and then the dollar will get crushed as bankruptcies proliferate, along with bank failures and corporate defaults. When there’s no serious public market for debt, the FED will probably try to buy up the new debt for awhile to try to wall off the the tsunamis of defaults, but how long will they be able to do that. Their last experiment in bond-buying and QE gave us 10% inflation, at least. Government inflation numbers are fraudulent because of how they compute the CPI.
During WWI, Germany’s politicians refused to raise taxes to help pay for the country’s wartime expenses. When they could no longer get investors to buy the country’s bonds at reasonable interest rates, its central bank bought the debt and effectively engaged in money printing. The Bush 43 administration went the Germans one better. Not only did it start wars in Afghanistan (2001) and Iraq (2003), it pressed Congress to cut income taxes in 2001 and 2003 instead of raising them to pay for the wars. Is there any reason to think that the American experience will turn out any better than the German experience?
In the Boeing whistleblower thing in the Senate today towards the end one of the senators mentioned the word “criminal” and I almost fainted. BA down a whole 36 cents today. .Guv has the C-suite’s back.
As a professional economist, I’m embarrassed by my profession. Economics is a way of thinking about how the world works. Unfortunately, that approach to economics hasn’t be taught for at least two generations. Instead, the profession has been hijacked by physicist wannabes who think that human behavior can be easily modelled and predicted with arcane quantitative models. As with the weather, there are all sorts of unknowns and feedback effects that make anything other than very short-term forecasting impossible. The former head of the Council of Economic Advisors, Arthur Okun once accurately observed that “economists forecast not because they know, but because they’re asked.”
They aren’t Physicist wannabes. If they were, they would actively throw out models that don’t work when it really matters, and quit trying theoretical approximations that are demonstrably too far from reality to be useful.
Imagine if economists were physicists who never got rid of bad thinking… They’d still be using Aristotelian concepts (objects in motion stop, earth is at center of universe etc) rather than advancing to Newton (objects in motion stay in motion unless acted upon by a force, earth orbits sun etc), and not anywhere near Einstein…
Economists today literally have debates that are no more significant or insightful than monks contemplating how many angels fit on the head of a pin…
Nothing says contemporary “economist” better than being dumb enough to sit around picking favorites among turds in a sewer, and believing it somehow matters.
With several years of inflation I expected gold prices to rise. Maybe this is a delayed reaction, but it seemed like it would happen eventually. I’m not sure what you mean when you ask “is everything under control?” I don’t think things are ever really under control, but I don’t think they’re out of control either.
A quick google search shows there were 31,600 economists in US in 2021. So the Journal asked 69 of them. Works for me. Im sure one was Paul Krugman. The others all called inflation solved as we have Inflation Reduction Act. The media never ceases to amaze.
Biden shows his understanding of economics by declaring how Caitlin Clark is underpaid compared to the NBA’s #1 draft pick victor Wembanyama. Little details like the NBA gets $2.7 billion from tv contracts while the WNBA gets $60 million plus the larger crowds paying higher prices are beyond the economic intelligence of someone who resembles Junior Soprano in the “Made in America” episode
He would be, for one reason, after 40 years of flat real wage growth resulting from tax incentives to create jobs overseas, both households and government can no longer afford to foot the bill for billionaire tax handouts.
Corporations are just using the spare cash for stock buybacks to increase C-suite bonuses, or to create manufacturing jobs in China, Mexico & India…meanwhile social entitlement spending rises to offset the lack of wage growth.
Those tax cuts were labelled “job creating”, apparently we needed to specify the jobs were supposed to be in America, and no, they have NOT paid for themselves, nor have they trickled down.
The Fed cannot be the band-aid by lowering rates for government & households to afford servicing forever.
Another data point suggesting the economy is ailing is today’s 20 year bond auction. Coupon rate was 4.5% but yield awarded was 4.818%. I have noticed several auctions where the yield awarded was higher than coupon rate, but I believe this is the largest discrepancy recently. I think the recession is here, just the reported data is so manipulated it does not show up in the reporting.
It’s this kind of thinking That is the reason why the economy is in a mess … why is it that Americans are the most poorly informed people in Western developed countries …
When 100% of the two political sides of the spectrum both believe they hear the truth from their side, and the other side is fed mostly lies, it’s no wonder we are an ill-informed nation. It’s very feasible both sides live on an info diet of primarily scat.
You can blame a lot of the problem on “social media”, as if it has some importance in the world. Social media id dominated by uneducated people, who lap-up whatever comes their way.
Ostrichitis
Bread and circuses.
I would only listen to rich economists, not a bunch of shabby profesors eager to sell articles for one dollar the word.
It’s like believing beauty tips from Marilyn Manson.
Fire them all. Then deport them. And stop reading the Journal.
Are 69 economists sort of like “There are 50 former national intelligence folks who said that what he’s accusing me of is a Russian plant” ? I bet all of these 69 “economists” make more than 200K/year. In other words they know nothing about the average man.
If your job depends on someone else’s corruption, then by all means, be corrupt.
My amazing psychic ability tells me that the next President will be an elderly white man with obvious mental problems who will wreck foreign policy and turn the US into a third world nation. It doesn’t matter what party you support. We are actors on a stage in ancient Greece in a drama where Fate has sealed our destiny.
If you walk through the West Side and South Side of Chicago and other big cities, it looks third world right now!
My cat would be better for the economy only because he sleeps 16 hours a day and spends the remaining 8 hours eating, grooming himself, and chasing his toys around. So no time to run an economy.
What’s your cat’s name? Has interesting policies and priorities.
Leo – orange tabby for a visual.
Who will your cat appoint as staff? The President just picks unelected staff, who are the ones that actually mis-manage everything.
Don’t want your cat as president, but he would be a great white house staffer
Well his Vice President will be his sister Hazel of course. Gotta maintain the nepotism.
In addtion, he has just informed me that his cabinet will be comprised of our 5 chickens (Gabby, Maggie, Pumpkin, Hermione, and Ruby). The chickens will pull double and even triple cabinet duties in between laying eggs and foraging for food.
I keep the eggs though.
A President who licks his balls? That would be different ( as far as we know)
🤣🤣🤣
Just like the 51 former “intelligence officers” that signed a fraudulent letter claiming the Hunter Biden laptop story was made up “Russian disinformation”
Just like the “experts”, “foreign intelligence” and US Senators made up a story about Trump and Russian collusion. They even paid for and propagated the made-up Steele Dossier and had a full blown spying operation called Operation Crossfire Hurricane against Trump and his campaign
It’s all BULLSHIT and NOBODY goes to jail
Today’s “economists” fall in the same pit of slime and scum
I thought the exact same thing. The 50 intelligence officers. LOL.
Trump raised my taxes and cut them on the wealthy. The economy has been roaring for a decade, and the ultra-rich have captured all that wealth.
I don’t care about the economy. I care about how the economy affects me… and for 10 years regular people have been getting the shaft.
Poor people voting for the interests of rich people is dumb.
Need to work on your reading comprehension skills.
Mish’s post and the survey he referenced were about academic economists
Gus wrote: “… I care about how the economy affects me… and for 10 years regular people have been getting the shaft.”
Four years out of that ten years you complain about were Trump.
Six years were either Obama or Biden… so 60% of your problems are caused by Obama or Biden.
No part of your comment makes any sense. You failed to understand the initial post, and then demonstrated complete lack of awareness about who caused 60% of your economic pain.
Looks like you also need improve your reading comprehension, you went down a deeper nonfactual rabbit hole.
No need to be rude.
“I don’t care about the economy. I care about how the economy affects me… and for 10 years regular people have been getting the shaft.
Poor people voting for the interests of rich people is dumb.”
It’s been a hell of a lot longer than ten years.
This has been happening since 1980, inception of Reaganomics, the deluded theory that making the wealthy wealthier trickles down to the rest of us.
China’s economy exploded as a result, the “trickle” went to them as Corporations and wealthy investors enjoyed those tax cuts while shipping our jobs to them.
“Trump raised my taxes and cut them on the wealthy.”
He did no such thing because
1) Tax policy is set by Congress, not the President.
2) Tax rates were cut across-the-board, except for the 10% and 35% brackets, the biggest percentage cuts were in the lower brackets and the standard deduction was nearly doubled. You may have paid more taxes but it wasn’t because of the TCJA.
You’re absolutely right, but the 2 party system is rigged, bought and paid for. The Republican party is no longer conservative because they openly cut taxes for the billionaires and raise them for the rest of us. Conservatives used to be anti-communists but many of them now want Russia to overrun Ukraine and end the war. Politicians used to protect jobs in this country but now export them to fascist states like China and Vietnam. Both parties represent the interests of the rich and corporate entities while pretending to champion the interests of regular people, but it’s political gaslighting.
Mish, isn’t the real issue here the fact that economists (as you’ve pointed out so well previously) include borrowed government money-fueled spending as GDP? The government is now “The Economy”?
Government spending is now a big part of the economy, about 25% of GDP. Lots of government spending is considered part of GDP even though it’s not exactly “product”.
These are what I call “bank” economists. They are all Keynesian, they are all progressives, and they all think with one brain. After 40 years in the economics profession, I still cant figure out why anyone would hire a flesh and blood keynesian. Since they all speak with one voice you just need to rely on the government economist to tell you what to do and think.
Oh and remember, this is the crowd that was certain that there would be at least 6 rate cuts this year. And their only real job is to predict interest rates.
Boggles the mind.
Modern economists worship fiat money, central banks and deficit spending. ‘Nuff said.
According to surveys performed by US colleges and universities on their own faculty, 94% of professors self identify as democrats with left leaning political views.
The WSJ survey says only half of that percentage thinks the first Geezer knows which economy he is supposed to fix. Biden is supposed to fix Ukraine’s economy right?
Meanwhile, less than 6% of academics self identify as Republican… yet 26% of economists in the WSJ survey think Trump will do a better job.
Surveys, like all statistics, need to be viewed in context to a “base case”. What is the long term expectation / average, and then ask how do current figures compare?
The academics are saying Biden is an idiot, otherwise the biden support number would be much closer to 94%
If you define the economy as GDP, and if you believe that government spending actually does increase GDP, then you would say Biden is better for the economy
Of course that also means you are a worthless economist
The Fed is going to do what the Fed does no matter who’s in charge, and both Trump and Biden appointed Jerome Powell as chair.
Trump drove the economy off a cliff. Just like W in 2007. Just like W’s daddy in 1991.
TDS in full display. Keep biting that pillow.
Trump slashed our job economy needlessly by denying the pandemic until he realized too late that it cost him re-election. But please, do tell us more about how wonderful Trump is. Actually you didn’t articulate a single thing about what Trump did that was beneficial to anyone other than his ego and his wallet.
Another TDS case with some conspiracy theory. Here is the cure that may work.. stop paying attention to fake news MSM especially MSNBC, CNN, NYT, NPR, FOX, WaPo, etc. have you ever heard of the beige book? Take a looks to get feel of current economic situation.
Trump was saying it was a pandemic when Pelosi said there was no such thing and people should go out and celebrate Chinese New Year in public. She later destroyed the tape. Trump was called a bigot for stopping flights from Red China. Meanwhile The NY Times science reporter said you were a bigot if you thought it came from a Chinese lab…which back then and especially today was the intelligent thought on it’s origin
How is it TDS to point out the economy sucked in 2020, 2007 and 1991? Keep huffing whatever Trump is passing.
Academia is generally far removed from the everyday world that normal people inhabit. They essentially live in a microcosm communist utopia funded by everyone else but without acknowledgement of it as such. They are overwhelmingly democrats because they know precisely who is more likely to support their way of life. That breeds a conflict of interest. Anyone critical of them is usually branded as anti-science or anti-education; a scarlet letter eagerly promoted by their brethren in the major media.
Academics are working on avoiding too much plagiarism among faculty.
If they also have to report conflicts of interest, they will be in real trouble
Most of these economists also called inflation as transitory. They get paid well for spreading misinformation through speeches, books, articles to benefit the administration in return for more kickbacks.
It doesn’t seem like a “hoot” to me. Despite constantly claiming the greatest economy in the history of the universe, GDP growth in Trumps first 3 years was 2.24%, 2.95%, and 2.29%. In Biden’s first 3 years 5.95%, 2.06%, and 2.5%.
GDP propped up by govt. spending with printed/borrowed money, inflation and increase in national debt is the evidence. 5.95% is an anomaly due to recovery from govt shutdowns aka pent-up demand.
No wonder you like Trump, you like making excuses as much as he does.
Unlike you, my hate for someone will not make me say some ridiculous stuff.
Federal debt grew by much more than any of those alleged GDP “growth” numbers.
They both “borrowed” 6+% of GDP every year, but only got 1/3rd as much in so-called growth? Lame
Have you been to the supermarket or a gas station in the last 39 months?
If you measure GDP (or anything) in dollars, you might want to subtract out “inflation”.