In this week's Macrocast, Ylan, John, and Brendan host a conversation with special guest Michael Strain, the Director of Economic Policy Studies and the Arthur F. Burns Scholar in Political Economy at the American Enterprise Institute (AEI). Their discussion begins by analyzing the addition of 216,000 jobs and a steadfast unemployment rate, examining how different economic indicators impact the Fed's interest rate decisions. Additionally, they reflect on how inflation impacts consumer confidence, juxtaposing the strength of the American labor market against the reality of stretched budgets. With jobs top of mind, they explore AI's potential to redefine jobs and wages, contrasting it with technological advancements in the 1980s. Specifically, they consider whether AI will be the great disruptor of high-wage roles or an unexpected ally, fostering innovation in some industries. Be sure to listen and, for more, check out Michael's recent book The American Dream Is Not Dead: (But Populism Could Kill It).
In this week's Macrocast, Ylan, John, and Brendan host a conversation with special guest Michael Strain, the Director of Economic Policy Studies and the Arthur F. Burns Scholar in Political Economy at the American Enterprise Institute (AEI). Their discussion begins by analyzing the addition of 216,000 jobs and a steadfast unemployment rate, examining how different economic indicators impact the Fed's interest rate decisions. Additionally, they reflect on how inflation impacts consumer confidence, juxtaposing the strength of the American labor market against the reality of stretched budgets. With jobs top of mind, they explore AI's potential to redefine jobs and wages, contrasting it with technological advancements in the 1980s. Specifically, they consider whether AI will be the great disruptor of high-wage roles or an unexpected ally, fostering innovation in some industries. Be sure to listen and, for more, check out Michael's recent book The American Dream Is Not Dead: (But Populism Could Kill It).
Happy New Year, everybody, and welcome to the first episode of the macrocast for 2024. I am your host, ilan Mui, a managing director at Penta. My co-hosts are John Fagan and Brendan Walsh of Markets Policy Partners, and we are kicking things off with a bang this year because our special guest today is Michael Strain, director of economic policy studies at the American Enterprise Institute, also known as AEI. Good to have you, michael.
Speaker 2:It's great to be here. Thank you for having me and happy New Year.
Speaker 1:Happy New Year. Alright, well, let's start with this year's first big piece of economic data, which is the jobs number. The Labor Department reported that the economy added a solid 216,000 jobs in December. The unemployment rate held steady at 3.7% and, michael, when I was reading through some of the coverage, I saw one fun factoid, which is that this is the longest that the unemployment rate has been under 4% since the 1960s. So I guess the big question everyone has on their minds for this year is will that last?
Speaker 2:Yeah, that's a great question. There are, there are some risks to that lasting and unfortunately, I think this morning's data kind of increased those risks. One risk is that the economy isn't quite as soft and isn't slowing quite as rapidly as people thought in the second half of 2023. And why is that a risk? That's a risk because if it is the case that the economy really isn't isn't slowing as much as as many had thought, then the Federal Reserve won't be able to cut interest rates as much as it thinks it will in 2024. Certainly, it won't be able to cut rates as much as markets expected to in 2024, and if the economy were to reaccelerate, the Fed might actually have to raise rates in 2024 rather than cut them or before it cuts them.
Speaker 2:And so you look at the jobs report this morning the economy added over 200,000 jobs. That was much higher than forecasters expected, much higher than a kind of strong number pre-pandemic would look like, and much, much higher than is required for the economy to absorb new interest into the labor market, which is kind of you know the the baseline you want to compare it to. In addition, we saw wage growth accelerate in the month of December. Wages, of course, are an important price, but they're also a signal of how strong the labor market is. And if we see wages accelerating, then wage use rate, if we see wage growth accelerating, then that makes it hard for the Fed to cut, uh cut, interest rates and that actually puts upward pressure on consumer prices as well.
Speaker 2:So, you know, I think this report should, should, worry the Fed. Uh, I expect it will worry investors, in the sense that investors will think twice about, uh, how soon rate cuts will begin and how many rate cuts there will be in 2024. Now, you know, it's one month of data and uh, we've got, uh another jobs report and a bunch of inflation uh data to come out between now and the Fed's March meeting, which is, which is the first time it could, it could possibly cut. It's not going to cut in January, uh, uh, so we'll see. But I think this is this is not good news for the soft landing narrative, it is not good news for the Fed, it is not good news for the uh outlook for equities in 2024. And it, you know, makes the likelihood of further interest rate increases uh, or uh the absence of a large number of of of cuts to the federal funds rate more likely.
Speaker 1:So, all right, Michael, you're kind of taking some of the shine off my excitement for 2024. You're already just four or five days. Four or five days, and, and, and I think that you're, you're, you're, your argument is really interesting because, you know, when I saw the number, initially I was kind of happy. I felt like this was maybe evidence that the soft landing is here, especially when you look at the fact that there were downward revisions for, uh, october and November jobs numbers. So, um, you know, there is. There's maybe some good news in here, along with some of the the concerns about how the Fed might interpret this data. John and Brendan, what did you think?
Speaker 3:Yeah, I kind of totally disagree. I think there's this Goldilocks for the Fed when you look at it. So take the employer survey you had negative 71,000 revisions to the previous two months, which continues with the trend of the last four months. So this number, 216, is not really the number. It's going to get revised down, um, but even more so, uh, when you look at the forward looking indicators um uh, warehousing and transportation was negative 2000. And, most importantly, um temporary health services lost 33,000 jobs. So those are the the forward looking indicators that we have. Uh. Also, the work week uh decreased. And also when you look at the household survey, we lost 685,000 jobs.
Speaker 1:Okay, so so some arguments for um. Perhaps you know good and bad news, both within the job report. Okay, john, can you be a referee? What do you? Where did you come in on this?
Speaker 4:Yeah, I think, just just to go back to something that Michael said, really, I mean the these, these numbers are. You know, they are something of a Rorschach test. You can kind of see something in them, but, you know, versus where the market was really, that's, that's the what's eliciting the reaction that we saw uh, the sell-off in treasuries, the dip in, uh in equity futures, and for a market that's obsessed with rate cuts and that really, you know, pushed the envelope, uh, as Michael said, at the end of the year, uh, dragging rate cuts forward, uh, base case starting in March, that's pretty aggressive. And uh, six rate cuts as the base case for the year, uh, you know, this is not really in keeping with what the Fed's saying.
Speaker 3:So, even if this number is kind of right down the fairway for for what the Fed might be looking at, it's definitely, you know, shanked uh into, uh, into a hotter territory than the market was looking for yeah, exactly, and that's why I kind of think it's the Goldilocks, where the Fed, the market, had priced in way more than the Fed had told them, and I think this market, this number, kind of brings them back to oh, maybe they actually are right and they'll only need to do three. Um, this isn't so strong that they need to hike, but it's also not so weak that, uh, the market, uh gets ahead of itself. Equities rally and rates, you know, drop to uh three and a half percent.
Speaker 4:Now I think that's a really good point. The Fed has, uh, really struggled to communicate and you know, we saw this after the uh, the Fed chair Powell's performance at the last Fed meeting was deemed dubbish, very dubbish, by, uh, by financial markets, and then there was like a torrent of communications trying to walk it back and it didn't really have much impact on the markets and it just looks like the data is going to have to. You know, if, if markets are going to price out these cuts, uh, fed chatter isn't going to do it, it's going to have to be, you know, backed up by the data, and I think that this is something that the Fed can point to and say hey look, you know, this is, this is much more in keeping with our projections.
Speaker 3:And also, I think Fed right cuts or hikes really have very little to do with the employment. I think we just enter in this steady state of it. You know a slowing, uh, jobs market, uh, but you know nothing falling off a cliff. It's all going to depend on inflation. If inflation keeps coming down at the pace that it has been and what the Fed thinks it is, then they're justified in cutting. You know three times If it's a little more sticky, that's where we get into the, the scenario where the Fed might have to hold for longer or, um, god forbid, hike again.
Speaker 1:So this is interesting because I feel like what we're really discussing is not, you know, is the economy strong or is it weak, but what might the Fed's reaction to the state of the economy be? And that really being where the concern is how does the Fed react? Does the Fed have to, uh, does the Fed overshoot, Does the Fed cut too much? And then what might the consequences of that be? So it really comes down to, you know, maybe the economy is in a steady state right now, but can the Fed tip the scales in the wrong way? And I wonder if, if we've ever been in a situation where inflation is falling and the job market has been so strong, or is it more common to have a situation where inflation is rising and the job market's crummy?
Speaker 3:Yeah, I think this this is very unique time and it's entirely driven by the pandemic, you know, and and that's what we're seeing in the inflation data. I think the Fed played a role in this, especially in the housing market with hiking so much. But the reality is that most of the inflation rate falling like it has is simply normalization of prices and supply chains. Uh, you know, in 2003, we created 191,250, 226, 194, 176, 190, 163. So that's across two administrations. You know we averaged around 175, got bonkers for three years and now we're kind of back to that 200,000 jobs. So that part of the economy, I think, is just very, very steady and for kind of 25 years we had sub 2% inflation, no matter what was going on in the economy.
Speaker 3:Covid threw everything on its head and I think we're seeing it kind of return to where the old economy that we had been in, and then the Fed's kind of choice there is. Do you believe that's the case? And, if so, rates where they are probably are too high. But the question is, where? Where do they need to go to find that neutral rate?
Speaker 1:Michael.
Speaker 2:Well, I think this is the most unusual economy we've been in since the demobilization from from World War Two and that, you know, has made it hard to to analyze and has really complicated, I think, the Fed's job. I don't. I don't agree that, that the inflation that we've seen, that the labor market tightness that we've seen is entirely driven by the supply side and that the Fed has not had much to do with it. If you look at, for example, the Fed's decision to start a tightening cycle, you saw a nearly immediate, substantial increase in 30 year fixed mortgage rates. That did have a cooling effect on the housing sector. You saw an immediate increase, or a near immediate increase, in short-term interest rates on treasury debt the two year, for example and so the Fed is having an impact on broader financial conditions and that is, in turn, having an impact on consumers and businesses. Credit card interest rates shot up substantially. That has had some effect on consumer spending and, in fact, one of the big risks raising the economy right now is high levels of consumer debt and rising credit card delinquencies. I think John was exactly right in pointing to some of the communications problems that the Fed has been having.
Speaker 2:The Fed's objective is to tighten broader financial conditions, and it has several tools for doing that. One of those tools, of course, is the federal funds rate, but also the way it talks, the way it communicates, is a tool for affecting broader financial conditions, and even though we have a federal funds rate above 5% right now, financial conditions are looser than they were at any point in 2023. And the reason for that is because the bond market thinks the Fed is gonna cut more than it says it will. The stock market thinks the Fed is gonna cut more than it says it will, and that really puts the Fed's strategy at risk. People consume out of wealth. Businesses make investment decisions based on based on the 10-year interest rate, based on revenue projections that incorporate these sorts of financial conditions and wealth, and that should worry the Fed. It should worry the Fed that it has failed to bring financial conditions to a place where they're tighter than they were 12 months ago, and it creates two risks. One risk is that the Fed has to further tighten financial conditions in order to get the labor market softer, in order to get consumers to stop spending money, and that could require more rate increases. The other risk is a little more benign but still problematic, which is the Fed just can't cut. You know the Fed thinks it's gonna cut three times. That may look optimistic if financial conditions remain so loose and if consumers keep spending and if we keep adding 200,000 jobs a month.
Speaker 2:Just to quickly revisit the conversation about the jobs report, you know, I think we can conceptualize the Fed's goal as follows the Fed does not want a recession, but the Fed does want a soft landing. What does a soft landing look like in the jobs report? A soft landing looks like the economy adding jobs every month, but adding fewer jobs than are needed to keep up with population growth. So the labor market needs to be softening, but not to the point that there are actually net job losses every month. The numbers we should be looking for are 30,000 jobs a month, 40,000 jobs a month, 50,000 jobs a month. When we see those numbers, then we can say, okay, soft landing. When we see 200,000 jobs a month, that's not within driving distance of soft landing territory. That's more than double the number of jobs that are needed to keep up with population growth In 2019, if we had gotten a month of 200,000 net new jobs, we would have said, wow, that was a strong month, that was a good month.
Speaker 2:That's still the case, given underlying demographics in December of 2023 and into 2024. We don't want strong month, we want weak month. That's what the Fed wants weak month. And this was not a weak month. It wasn't even close to a weak month, and I think that's why you're seeing Dow futures down and interest rates going up.
Speaker 1:Michael, to your point about sort of market expectations going crazy after the Fed even just let out a whiff of a potential of a rate cut. I mean, that's why I think we heard it was the New York Fed president, john Williams, and others come out right after the Fed's meeting in December sort of saying, actually maybe we rate cuts weren't really on the table. We didn't really discuss it that much and tried to try to walk back some of the some of the very clear rhetoric that Chair Powell had given to the markets, but the reaction was so outsized that they felt the need to rein in some of those expectations. So I guess we'll see if they're able to use I hate this term, but what they call the open mouth strategy in order to tighten financial conditions, or if they have to resort to the blunt instrument of actually looking at the Fed funds rate.
Speaker 2:Yeah, I mean right now financial conditions are tightening because of the reality of the December job market data. We'll see if that lasts throughout the day, but that's definitely-.
Speaker 3:Yeah, futures are already flat.
Speaker 2:No, but that's the knee jerk And-.
Speaker 3:Yeah, it's crazy to watch in real time. People decide is it good, is it bad? Is it good, is it bad?
Speaker 1:They're having this debate in the markets that we're having right now on the spot list, absolutely.
Speaker 1:I wanted to ask you to Michael a little bit. If we can maybe go 30,000 feet here, is that as you think about the evolution of the job market over the course of the year? Obviously, what the Fed does will be front and center, but there's also some major technological shifts that are underway and the big story in the tech industry is around what the future of generative AI might be and how that might change the landscape. How do you see that interacting with the job market, if at all?
Speaker 2:Well, I think there are some clear interactions. If we were to see labor demand continuing to cool, monthly job openings decline would be the first place I would look to see if labor demand were cooling. If we start to see monthly job reports in the 50, 60, 70,000 net new jobs for month range, but we continue to see wages growing at above a 4% rate, then I think you want to look to the productivity effects of some of these new technologies. I think you can say that wage growth number does not look like it is in sync with labor demand. It doesn't look like it's in sync with the equilibrium outcomes of the labor market in terms of payroll employment. Should we be worried about that as an inflationary signal? Well, maybe not. I think in 2019, you would have said sure, yeah, you should be worried about that. But in 2024, the answer may be not, because new technologies, generative AI, could just be boosting productivity for enough workers. That 4% 4.5% wage growth is actually consistent with the Fed's inflation target.
Speaker 3:Yeah yesterday, Google announced that they're laying off 30,000 people directly because of AI productivity gains.
Speaker 1:So let's play that out then Does that mean that AI is replacing jobs?
Speaker 2:Well, I think AI will certainly replace job tasks.
Speaker 2:There will be things that workers do that AI will do instead.
Speaker 2:I think there will be some jobs that AI completely eliminates, but I think the right way to think about it is more that AI will be more efficient at doing some things than workers, so workers will stop doing those things, they'll stop doing those tasks.
Speaker 2:That AI will make workers more productive at doing another set of things, and so AI will be a tool that will increase productivity for some other tasks, and that AI will make us wealthier as a society, make many individuals wealthier, and that that will lead to an increase in consumer demand for goods and services, many of which don't currently exist and whose existence will be made possible by technological advances and by the wealth that technology will create and that, in turn, will create new jobs, that I should say that will create new occupations that don't currently exist but where workers will be needed, and so this is the story I'm telling is what has happened every time a new technology has come on the scene since the Industrial Revolution, and I don't really see a good reason to think that the same story, in broad terms at that. I'm talking at the 60,000 foot level here, but I don't see any reason why that story won't be the story of generative AI.
Speaker 3:Yeah, I think that's a really good point, because we talk about chat, gpt. You know that's going to write your articles for you, but that's really just the tip of the sphere, like the amount of gains that are happening, especially in the healthcare industry and the technology center. Whole new things are being developed that don't exist right now. That will produce new jobs but, like you said, like entire new industries. So you're kind of taking away a simple job that maybe AI can do, but it's creating a whole new world of much more productive industry that can better society. So you know, there's, like you said, this is a new technology. We've been doing it for thousands of years and every time we kind of make it through it. So I don't know exactly how it's going to unfold, if the robots are going to take us over, but I don't think that's next year.
Speaker 1:Well, but as these new industries and jobs are created, does that exacerbate the ongoing sort of barbelling of the American economy? If sort of more routine tasks can be done more efficiently by AI, does that mean that we end up with an economy that has rewards you know, super productive, high knowledge workers and those who's more routine tasks still cannot yet be done by AI and that the folks who are in the middle there's less room for them?
Speaker 2:So I think it could undo some of that so that I think is a good summary of the kind of labor market effects of technological change in the 1980s and 1990s. This is the following out of the middle If you think about a bank and imagine this bank has three employees, this bank has a low wage custodian, a middle wage cashier and a high wage manager. The technology of the 1980s and 1990s took out the cashier. It didn't take out the manager. It didn't take out the custodian. If you think about a factory and imagine that factory has three employees, a custodian, an assembly line worker and a foreman, robots in the 1980s and 90s took out the assembly line worker and didn't take out the higher paid or lower paid employee.
Speaker 2:What AI, what generative AI, is proving to be good at our tasks that we might think of as creative? They are tasks that we might think of as requiring expertise. Writing a newspaper article is a creative task. Taking a 500 page legal brief and writing a 1000 word summary of that brief requires expertise.
Speaker 2:Rather than hitting middle wage workers I think high wage workers are at greater risk this time around AI will also compliment a lot of the work done by high wage workers.
Speaker 2:You could have this kind of strange situation where there are high wage occupations with a bunch of people who are losers as a consequence of advantages of generative AI, and then a separate group of high wage workers that are winners as a consequence of advances in generative AI technology. If you think about a surgeon, for example, or a diagnostician. Those occupations could become phenomenally more productive as a consequence of these advances and those workers could see their incomes go way, way up at the same time that you're seeing other high wage workers really at risk as a consequence of this technology. It's hard to say precisely how it will unfold, but I think at this stage, if I had to guess, I would guess that you're gonna see much more disruption of higher wage workers and much more disruption of lower wage workers as well than workers in the middle, which is exactly the opposite of what we saw in the 80s and 90s.
Speaker 1:Yeah, I'm not trusting my surgery to generative AI or even the roadmap to my surgery, to generative AI.
Speaker 2:I want to remember that You're not trusting it yet. Not yet not yet.
Speaker 1:Michael, I also wanted to ask you a little bit about the way that people are viewing the economy. In our conversation about AI, obviously there's a lot of questions. There's a lot of, perhaps angst, even on the part of some folks in the labor market, around what that will look like, and one of the things we've talked a lot about on the podcast is the fact that, even though, as you were saying, the economy is still delivering strong job numbers maybe too strong even though the economic data seems to be coming in solid that folks still have a pretty pessimistic view of where the economy is headed. And I'm curious of whether you have any ideas behind what could be driving that disconnect, because in the writings that you've done, you seem to argue that this is actually this is a great time and people should realize that A great time to be in the American economy.
Speaker 2:Yes, I do think that I think the disconnect between kind of economic aggregates, the headline statistics you read about in the newspaper, the disconnect between those and consumer sentiment and not nearly as much of a mystery as the media makes it out to be. I follow developments in the economy pretty closely, but even as somebody who follows them pretty closely, when I take my family out to lunch on a Saturday at the same restaurant we've been going to for six years and instead of $40, the lunch cost $60, I feel like somebody has punched me in the face and stole on a $20 bottom of my wallet. And we're two years into this and I still feel that way and I don't like that feeling. Is that five?
Speaker 1:guys, because I feel the same way when I go to five guys.
Speaker 2:We only recently discovered five guys, and that's been great for me because I love five guys.
Speaker 3:Or even more annoying is if then they put the surcharge at the end. I think that really really really annoys people.
Speaker 2:The service is terrible, and the quantity of food you get is 80% of what it used to be. You're losing a fifth or a quarter of the food you get. The whole thing is ridiculous.
Speaker 3:But you're also right, because while it's probably holding steady at $60, that doesn't matter You're still annoyed that it's $60.
Speaker 2:Yeah, I mean the price of food. The last time I looked, the price of food is over 20% higher. The food component of the CPI is what I'm referring to. The price of food is measured by the CPI, is over 20% higher than it was when President Biden took office, and I don't mean to politicize it. I think the Biden administration bears some responsibility. But certainly there's lots of reasons why we've had inflation beyond fiscal policy. But the point is that that's the way that this is being discussed in the media, so that's why I calculated it relative to January of 21. And that's a lot.
Speaker 2:And, exactly as you said, just because the rate at which prices are going up has slowed, that prices are still way higher than they were in 2019, which is a reference point for a lot of people way higher than they were before the pandemic, way higher than they were, whatever, after the lockdowns ended. Whatever your reference point is and people don't like that. How is that consistent with consumer spending statistics? Well, I just paid my credit card bill yesterday. It was a whole lot higher than it would have been in 2019. So my spending has gone up and I feel terrible about it, and that is, I think, something that is true of people that they're spending more money and they're not feeling good about it.
Speaker 2:How is that consistent with a labor market as strong as the one we have? I think you have to remember that even in the worst labor market, nine out of 10 workers have jobs, and so if the benefit of this inflation is that we have a 3.5% unemployment rate rather than a 5% unemployment rate, or rather than a 5.5% unemployment rate, that's great news for those two workers that have a job that otherwise would be unemployed, and they should be really happy that they have a job and they should be feeling good about the economy. But that's two out of every 100 workers. Inflation touches 100 out of every 100 workers, and inflation touches the one-third of households that aren't working, and so pointing to a tight labor market and saying that that should really be the driver of consumer sentiment more than inflation seems to me to misunderstand the magnitudes involved to an astonishingly large degree. It has been four decades since the United States has experienced high inflation.
Speaker 3:I think that's a really important point.
Speaker 2:Yes, and it has caught many analysts kind of flat-footed. People don't have a good sense of how much Americans dislike inflation. But if you go back to the 70s you see whip inflation now win campaign buttons. You hear about people in gas waiting in line for two hours to fill up their car with gas. President Nixon, a Republican, instituted wage and price controls in order to address inflation. The Federal Reserve had no idea what to do. I mean it was extremely destabilizing politically and socially and that's because people really really really don't like inflation. Then we had 40 years without inflation and people forgot that people really, really, yeah.
Speaker 3:and now we have it back.
Speaker 2:And now everybody is so miserable. We have a low unemployment rate. It's like well, because everybody hits inflation.
Speaker 3:Yeah, and it doesn't really matter why it happened, because now that's in the past. You can explain to somebody oh, we did this, this and this is going to be good, but that doesn't matter. Right now you're annoyed that it's higher.
Speaker 2:The people who are answering the consumer sentiment surveys don't know why it happened. They don't care why it happened. They're not reading research papers trying to figure out why it happened. They're just going to the grocery store and they see everything's 20% more expensive than they think it should be. Yeah, Okay.
Speaker 1:So, Michael, you've laid out a good case for why consumers are annoyed, why you personally are annoyed when you go out to eat. I feel assaulted, but literally, you said you felt assaulted. Okay, but your baseline argument, though, is that this is still a really great time to be in the American economy. So let me try to end on a happy note. And why is that? Despite all of these things that we just laid out, why is that?
Speaker 2:Well, I think this is a temporary situation, so I think we've made a lot of progress in fighting inflation and that progress will continue. It may be that 2024 is a tumultuous chapter in the fight against inflation, or it may be that inflation comes to a quick and quiet end in 2024. But either way, I think we're well positioned to get inflation back to normal. But, more broadly, america is a country that's characterized by significant upward mobility. America is a country that is dripping with opportunity for people to make their own economic situations better. America is a country where hard work pays off. Empirically speaking, the most important determinant of compensation is productivity. Hard work, effort, skills, risk tolerance payoff in America. That's one of the kind of central moral promises of democratic capitalism and America is keeping that promise to its citizens.
Speaker 2:If you look over the last 30 or 40 years, you see that inflation adjusted wages for the average worker are up 30 or 40%. That's of a substantial increase in purchasing power for typical workers. You see household income up by similar amounts substantial increase in the purchasing power and the living standards of typical households. If you look to the future, we should be, I think, extremely optimistic. We were talking earlier about generative AI. That's going to be a revolution for schoolchildren. We're going to be able to give a personal tutor to every child. That's going to have the biggest effects on lower income kids, on working class kids, who are going to get much more out of their years as students than they currently do. That's going to benefit them throughout their working lives in the form of higher wages and more rewarding careers.
Speaker 2:We're seeing incredible advances in medical technology. We just saw the first drugs for Alzheimer's approved. Crispr is doing all sorts of miraculous things. We have two malaria vaccines. We have malaria vaccines coming online to tuberculosis vaccines in the works. These are remarkable advances in medical technology that are going to benefit Americans and people all over the world. Things are really, really good.
Speaker 3:Especially the medical advances we're making. This is just starting. It's underreported, and how much different next year, but especially five years, are going to be in terms of things that used to kill us. We'll nip them in the bud.
Speaker 2:We just stopped the plague Pretty quickly. I mean seriously. We did it without. Gdp is back to trend. We had more employees than we did before the pandemic began.
Speaker 3:Way too much inflation.
Speaker 2:Way too much inflation. That's not good.
Speaker 1:There's always going to be a fly in the wait, not everything is perfect.
Speaker 2:I think that there is an astonishing amount of pessimism and negativity in the public debate. President Trump says the American dream is dead. Senator Bernie Sanders says the American dream is a nightmare. We hear this from politicians, leading politicians at both parties. President Trump and Elizabeth Warren say that the American economy is rigged against typical workers and typical households. You hear this from business leaders. You hear this from economists. You hear this from public intellectuals and public figures. It's not just politicians. The message is everything is awful, everything is awful, everything is awful, everything is awful, everything is great. If you have to pick between everything is awful and everything is great, pick everything is great.
Speaker 2:I agree, even though the inflation is so annoying and bad. Median household income, after adjusting for inflation, was lower in 2022 than it was in 2021, in 2020, or then in 2019. That's a real burden for people. Even given that burden, even given how bad the years following the 2008 financial crisis were for millions of workers and millions of households, even given these significant obstacles that our nation and our workers and our households have faced over the last 15 years, things are still really good. They're way better than they were in the 70s. They're way better than they were in the 50s. They're on an upward trajectory.
Speaker 1:I feel like I've achieved my goal of ending the podcast on an optimistic note. Thank you so much, michael. That does it for us. At the Macrocast. I'm Elan Moy with Penta. My co-hosts are Brendan and John of Market's Policy Partners. Again, michael, thank you so much for joining us. I would be remiss if I did not mention your book aptly named. The American Dream is Not Dead, but Populism Could Kill it. We'll have to have you back on and talk about the second half of that title. We hope you all enjoyed our show.
Speaker 1:Remember, you can always listen, like and subscribe to the Macrocast wherever you get your podcasts. Thanks for listening.