- Apr 3, 2003
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Right now America’s economic-growth rate is the envy of the world. From the end of 2019 to the end of 2023, U.S. GDP grew by 8.2 percent—nearly twice as fast as Canada’s, three times as fast as the European Union’s, and more than eight times as fast as the United Kingdom’s.
“It’s hard to think of a time when the U.S. economy has diverged so fundamentally from its peers,” Mark Zandi, the chief economist at Moody’s Analytics, told me. Over the past year, some of the world’s biggest economies, including those of Japan and Germany, have fallen into recession, complete with mass layoffs and angry street protests. In the U.S., however, the post-pandemic recession never arrived. The economy just keeps growing.
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Price increases on their own, however, can’t tell us if the cost of living has gone up. What really matters is the relationship between how expensive things are and how much money people have to spend on them. As Vox’s Eric Levitz recently pointed out, prices have increased by 1,400 percent since 1947; that doesn’t mean Americans have less buying power today than at a time when a third of the country didn’t have running water and 40 percent lived in poverty. That’s largely because incomes have increased by 2,400 percent over the same stretch. If prices go up but people’s incomes go up faster, then the cost of living decreases. And that is exactly what has happened in the U.S. over the past five years.
It took some time. When inflation was at its worst, in late 2021 and 2022, prices were rising too fast for workers’ pay to keep up. Over the course of 2023, however, the rate of inflation plummeted while wages kept rising. According to calculations by the economist Arindrajit Dube, prices rose about 20 percent from the beginning of the pandemic to the end of 2023—but the median worker’s hourly wages had increased by more than 26 percent. In other words, a dollar in 2024 might not go as far as a dollar in 2019, but today the average worker has so many more dollars that they can afford a higher quality of life.
June 12, 2024:
With inflation slowing more than expected last month, investors are hopeful that the Federal Reserve will cut interest rates soon. The inflation report was released shortly before the Fed is expected to announce its latest interest-rate decision and economic forecasts for the year. That announcement is set for 2 p.m., with Fed Chair Jerome Powell scheduled to speak at 2:30 p.m.
qz.com
“It’s hard to think of a time when the U.S. economy has diverged so fundamentally from its peers,” Mark Zandi, the chief economist at Moody’s Analytics, told me. Over the past year, some of the world’s biggest economies, including those of Japan and Germany, have fallen into recession, complete with mass layoffs and angry street protests. In the U.S., however, the post-pandemic recession never arrived. The economy just keeps growing.
...
Price increases on their own, however, can’t tell us if the cost of living has gone up. What really matters is the relationship between how expensive things are and how much money people have to spend on them. As Vox’s Eric Levitz recently pointed out, prices have increased by 1,400 percent since 1947; that doesn’t mean Americans have less buying power today than at a time when a third of the country didn’t have running water and 40 percent lived in poverty. That’s largely because incomes have increased by 2,400 percent over the same stretch. If prices go up but people’s incomes go up faster, then the cost of living decreases. And that is exactly what has happened in the U.S. over the past five years.
It took some time. When inflation was at its worst, in late 2021 and 2022, prices were rising too fast for workers’ pay to keep up. Over the course of 2023, however, the rate of inflation plummeted while wages kept rising. According to calculations by the economist Arindrajit Dube, prices rose about 20 percent from the beginning of the pandemic to the end of 2023—but the median worker’s hourly wages had increased by more than 26 percent. In other words, a dollar in 2024 might not go as far as a dollar in 2019, but today the average worker has so many more dollars that they can afford a higher quality of life.
June 12, 2024:
The Dow surges 300 points and the S&P 500 hits a record high as inflation cools
The Dow Jones Industrial Average and other stock indexes rose sharply after markets opened Wednesday, as the latest Consumer Price Index data showed inflation cooling. The CPI rose 3.3% year-over-year in May, according to data released by the Bureau of Labor Statistics, lower than the 3.4% expected increase.With inflation slowing more than expected last month, investors are hopeful that the Federal Reserve will cut interest rates soon. The inflation report was released shortly before the Fed is expected to announce its latest interest-rate decision and economic forecasts for the year. That announcement is set for 2 p.m., with Fed Chair Jerome Powell scheduled to speak at 2:30 p.m.
The Dow surges as inflation cools — then gives it all back as the Fed says only one interest rate cut
The S&P 500 was still up after hitting a record high. The central bank had previously projected three interest rate cuts in 2024.
