I just don’t understand

Trumpistas in 2016:  “Sumner, you just don’t understand.  You professors live in an upper middle class bubble, where you don’t see all the suffering out in the real America.  The economy is not doing well; it’s doing horribly.  Things are so bad that average people are turning to meth, to opioids.”

Trumpistas in 2018:  “Sumner, you just don’t understand.  Trump has made America great again—the economy has never been better.  Look at the stock market.  Look at the black unemployment rate.  As Trump says, America is doing great.”

I’m willing to concede that I just don’t understand, so please help me to learn.

Are we really doing better than ever?  Better than the LBJ years, when RGDP growth averaged 5% over 21 quarters, instead of peaking at 4.2% for one or two quarters?  Maybe so.  After all, we really are richer than in the 1960s.  But if that’s your criterion, then wouldn’t the same apply to Obama’s second term, when real median household income reached an all time record in 2016?

Today the Census bureau released the income data for 2017, and it showed another 1.8% increase in real median household income, to a new record of $61,372.  Pretty impressive.  But it’s also true that this measure rose by an even more impressive 3.2% in 2016, and by an extremely impressive 5.2% in 2015.

They also announced a reduction in the poverty rate, from 12.7% to 12.3%.  Again, pretty impressive.  But the rate fell from 13.5 % to 12.7% in 2016.  And it fell from 14.8% to 13.5% in 2015.

There are many ways of looking at a picture as complex as the US economy.  In 2016, I saw an amazing wealth generating machine that produces living standards that earlier generations (and most other countries) can only dream about.  Trumpistas saw economic carnage everywhere they looked.  Both are valid arguments, depending on what data points you want to emphasize.  You can even claim the economy is doing better under Trump than Obama.

What is not a valid claim is that we’ve suddenly gone from being a disaster to being great again, because of a few upward tweaks in some data points. Tweaks that are not dramatically different from what occurred in previous years and decades.  All the problems in the Rust Belt are still out there.  Either the Trumpistas were lying in 2016, or they are lying today.  (I say they were lying in 2016–we’ve always been great.)

PS.  In a previous post I noted that people in south Orange County seemed friendlier than in Boston.  In fairness, I should note that this might partly reflect my “white privilege”.  People in south Orange County are certainly not as friendly to a visiting high school football team from Santa Ana, a city that is 80% Hispanic.  In that respect, my daughter’s Newton, Massachusetts high school was superior to the Aliso Niguel high school.

My wife and I like to visit Santa Ana, which is less boring than Mission Viejo.  You might wonder how we dare visit a city full of “rapists and murderers”.  Here’s Wikipedia:

In 2011 Forbes ranked Santa Ana the fourth-safest city of over 250,000 residents in the United States.

That ranking partly reflects traffic safety, but its crime rate is also fairly low.  (Ranking 11th safest in terms of violent crime.)  Ironically, I almost ran someone over in Santa Ana a few days ago.  A motorcycle merging onto the freeway flipped over right in front of me, and the guy tumbled into my lane.  Fortunately, I was going a bit slower than normal (I had just merged, and was only up to about 60mph.) I slammed on the brakes and came to a stop about 10 feet from the guy.  Drive defensively!

PPS.  Commenter Ben Cole will like this:

“Just run the presses — print money,” Trump said, according to Woodward, during a discussion on the national debt with Gary Cohn, former director of the White House National Economic Council.

And this made me smile:

As a candidate, Donald Trump pledged to balance the federal budget and lower the national debt, promises that are proving difficult to keep.

Actually that’s fake news.  Trump didn’t promise to balance the budget; he promised to run budget surpluses that were so enormous that the national debt would be entirely paid off in 8 years.  And yes, I’d say if you increase government spending and sharply cut taxes, causing the deficit to suddenly double to $1.1 trillion (in 2019), despite 3.9% unemployment, then it would prove “difficult” to keep your promise.

As an analogy, if a person who goes to AA each week suddenly goes out and buys an entire crate of Jack Daniels, it might be difficult for them to keep their sobriety promises.



20 Responses to “I just don’t understand”

  1. Gravatar of Matthew Moore Matthew Moore
    12. September 2018 at 11:24

    I wonder if ‘real America’ does feel better, because they won something and annoyed a bunch of smug people.

    People used to say that voting UKIP was like smoking. Feels good, bad for you, annoys all the right people

  2. Gravatar of Christian List Christian List
    12. September 2018 at 12:57

    I’m willing to concede that I just don’t understand, so please help me to learn.


    you can’t be that naïve. It’s called “politics”, you know that, right? Why should a challenger admit that the economy is developing fine and that the President has not much influence on the economy? It would have been honest but it wouldn’t make too much sense because a lot of voters don’t want to hear that. At least that seems to be the prevalent opinion about the average voter.

    I don’t remember the 2008 campaign in every detail but I bet Obama acted as if the economic downturn was Bush’s fault and that Obama’s influence on the economy would be great (fiscal stimulus, yeah!!!), when the more honest approach in 2008 would have been: “Monetary policy is all wrong right now and the President can’t do too much about it. The Fed should just do its job.”

    Did you complain about that, too? My impression is that your TDS posts are just politics, too.

    You had it (more) right a few posts ago when you supposedly said that Trump’s rise had cultural reasons. Most voters (and I bet even Trumpistas) get that the economy was doing fine, they know that it was an act.

    @Matthew Moore
    Great comparison.

  3. Gravatar of Arilando Arilando
    12. September 2018 at 13:02

    I will take the liberty of copying from a comment i made on a previous post that touched on some of the same issues:
    Than why didn’t you buy a house in Santa Ana instead, with its significantly lower real estate prices? Could it have something to do with the fact that 77.3% hispanic Santa Ana has a homicide rate nearly 7 times that of Mission Viejo or Irvine?

    The Forbes ranking is either bullshit or the homicide rate in all larger american cities is very high. The homicide rate in Santa Anna in 2016 was 6.8 per 100,000, and this is by no mean an aberration from other years. The overall rate for the US in that year was 5.3.

    BTW 18.2% of the population of Mission Viejo is black and hispanic. 44% of the population of California is black and hispanic.

  4. Gravatar of ssumner ssumner
    12. September 2018 at 15:03

    Arilando, The house we bought in Mission Viejo would probably have been more expensive in Santa Ana. As you go north in Orange County, houses get more expensive. I would have preferred northern Orange County (say Fullerton or Tustin), but it’s more expensive for the same house.

    Don’t get me wrong, we can afford to live in northern OC, but we have a dream house in MV, which is hard to find in places closer to LA. Even in Irvine our house would have cost at least $500,000 more. (In west LA it would be three times as much.) Santa Ana has lots of boring 1950s ranch houses.

    And yes, your murder data is misleading, as 2016 was an outlier. The murder rate over the past five years is less than 5, i.e. below the national average. I used to live on the south side of Chicago, so I don’t get too worried about places with a murder rate of less than 5. Most murders are people killing relatives, or other gang members.

    I consider the mostly white nature of MV to be a mild negative; it makes the town more boring. (Not that I have anything against white people—some of my best friends . . . )

  5. Gravatar of ssumner ssumner
    12. September 2018 at 15:06

    Christian, I’m not looking to learn from people just as cynical as I am, I want to learn from the true believers. Surely some Trumpistas really did think the economy was bad in 2016.

  6. Gravatar of B Cole B Cole
    12. September 2018 at 17:18

    PPS. Commenter Ben Cole will like this:

    “Just run the presses — print money,” Trump said, according to Woodward, during a discussion on the national debt with Gary Cohn, former director of the White House National Council.

    In this particular instance, Trump is not entirely wrong. And evidently, in other circumstances, Trump has pondered why quantitative easing seems to make the national debt disappear without consequence.

    As someone who buys and sells real estate, Trump may actually understand finance. Sporadically.

  7. Gravatar of E. Harding E. Harding
    12. September 2018 at 19:25

    You might wonder how we dare visit a city full of “rapists and murderers”.

    An amazing 1.5% Black, Sumner. Well done. That’s some true Diversity with a capital D right there.

    As an analogy, if a person who goes to AA each week suddenly goes out and buys an entire crate of Jack Daniels, it might be difficult for them to keep their sobriety promises.


    Luckily, I’m not a Trumpista. I have made no exaggerated claims about the Trump economy.

    The economy was bad in 2016, and it’s bad now mostly in the same ways (though there are mild signs of improvement), with the added benefits of full employment and manufacturing job growth. Whatever changes that have taken place are not due to Trump.

  8. Gravatar of Rob Rob
    13. September 2018 at 02:38

    Or maybe people are complaining about the economy because talking about the real issues is illegal.

  9. Gravatar of Arilando Arilando
    13. September 2018 at 05:01

    According to city data mean price of a detached house in Santa Ana is $510,800 while in Mission Viejo it is $714,066. And the homicide rate in Mission Viejo is in any case significantly lower than Santa Ana (no murders at all for most years), which the lower hispanic population is a contributing factor to.

  10. Gravatar of other derek other derek
    13. September 2018 at 07:20

    @Christian I recall the economic case for Obama in 2008 being that McCain & Palin did not seem very equipped to deal with the financial crisis rather than a pillorying of Bush. At the time, most politicians seemed to want allay panic and prevent the Depression that they feared was possible, so political messaging was more about who could most convincingly argue that a) the economy could bounce back and b) their plan was best for doing so.

    As far as criticizing Obama in 2008 with the hindsight of a market monetarist blog regarding Fed policy goes, I would say that a) your memory may be greatly overestimating the influence of Sumner and adjacent ideas circa 2008 and b) it is kind of awkward ground for politicians to tread in forcefully publicly criticizing Fed policy, as the Fed needs to remain independent; if someone dropped the ball on public criticism of the Fed in 2008, it was probably some combination of Fed employees and academics.

  11. Gravatar of Fred Fred
    13. September 2018 at 08:53

    I think this is the necessary byproduct of leading with politics — not quite ideological considerations as Trump has none, but more so a cult of personality around the man — and allowing the facts to follow or, better stated, manipulating and cherrypicking until the facts (or assertions) they’re willing to accept (the ones that haven’t been branded ‘fake news’) are all that remain. Unfortunately, this extends far beyond economics.

  12. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    13. September 2018 at 09:09

    ‘…if someone dropped the ball on public criticism of the Fed in 2008, it was probably some combination of Fed employees and academics.’

    Well, there was that guy who blithely opined that he thought it was the consensus of the economics profession that you fight recession with fiscal policy, and then went on to ignore vacancies on the Fed Board for years. You know, who I mean, the Nobel Peace Prize winner.

    If Trump is getting blamed for the latest hurricane, he might as well take credit for everything that goes right too.

  13. Gravatar of Rick Rick
    13. September 2018 at 13:42

    You sound like one of the chronic trolls who haunt the comments sections of the Hill or Politico.

  14. Gravatar of ssumner ssumner
    13. September 2018 at 14:28

    Harding, Wasn’t Trump’s comment about Mexicans, not blacks?

    Arilando, You said:

    “According to city data mean price of a detached house in Santa Ana is $510,800 while in Mission Viejo it is $714,066.”

    I suggest you read my reply again. I have no interest living in a 1200 sq. foot ranch, in any town.

  15. Gravatar of Bill Bill
    13. September 2018 at 17:25

    The republican congress had more to do with the recovery kicking in than trump. Indeed, the periods of rising ream median incomes coincide with republican control of the senate, and recessions take hold when the democrats control the senate.

    Congress Control Growth
    096: 1979-1980 D -2.1
    097: 1981-1982 R -3.9
    098: 1983-1984 R 3.8
    099: 1985-1986 R 5.6
    100: 1987-1988 D 2.0
    101: 1989-1990 D 0.4
    102: 1991-1992 D -3.7
    103: 1993-1994 D 0.7
    104: 1995-1996 R 4.6
    105: 1997-1998 R 5.9
    106: 1999-2000 R 2.3
    107: 2001-2002 -3.3
    108: 2003-2004 -0.4
    109: 2005-2006 R 1.9
    110: 2007-2008 D -2.3
    111: 2009-2010 D -3.3
    112: 2011-2012 D -1.7
    113: 2013-2014 D 1.9
    114: 2015-2016 R 8.4
    115: 2017-2018 R 3.8
    R-Senate 3.6
    D-Senate -1.1

  16. Gravatar of E. Harding E. Harding
    13. September 2018 at 17:27

    Wasn’t Trump’s comment about Mexicans, not blacks?

    True. The literal words were correct, but the broader point wasn’t. Trump has a spotty relationship with the truth.

  17. Gravatar of Christian List Christian List
    13. September 2018 at 19:41

    @other derek

    rather than a pillorying of Bush.

    That’s just not true. Obama loved to talk about Bush and the „failed theories of the last eight years that got us into this fix in the first place, because those theories have been tested, and they have failed.”

    So Obama wanted austerity?! Keep in mind that Bush was one of the biggest spenders of all time.

    with the hindsight of a market monetarist blog

    These parts of Scott’s theories aren’t new at all but rather old and go all the way back to Milton Friedman, for example.

  18. Gravatar of Justin Justin
    14. September 2018 at 10:04

    I interpret this post to mean that Sumner is really irked that the NGDP outlook is close to 5% and DRUMPF is president. Some people don’t know how to win.

  19. Gravatar of Weekend Reading: A Permanent Shift To Valuations? – iftttwall Weekend Reading: A Permanent Shift To Valuations? – iftttwall
    14. September 2018 at 12:34

    […] I Just Don’t Understand by Scott Sumner via The Money Illusion […]

  20. Gravatar of ssumner ssumner
    14. September 2018 at 14:16

    Bill, If you want to talk about “recessions” then talk about real GDP, not median family income.

    Justin, Only the second fact displeases me, we were equally close on NGDP when Obama was President.

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